[Congressional Record (Bound Edition), Volume 145 (1999), Part 5]
[Senate]
[Pages 7511-7531]
[From the U.S. Government Publishing Office, www.gpo.gov]



                          AMENDMENTS SUBMITTED

                                 ______
                                 

                                Y2K ACT

                                 ______
                                 

                 McCAIN (AND OTHERS) AMENDMENT NO. 267

  Mr. McCAIN (for himself, Mr. Wyden, Mr. Gorton, Mr. Abraham, Mr. 
Lott, Mr. Frist, and Mr. Burns) proposed an amendment to the bill (S. 
96) to regulate commerce between and among the several States by 
providing for the orderly resolution of disputes arising out of 
computer-based problems related to processing data that includes a 2-
digit expression of that year's date; as follows:

       Strike all after the word ``section'' and insert the 
     following:

     1. SHORT TITLE; TABLE OF SECTIONS.

       (a) Short Title.--This Act may be cited as the ``Y2K Act''.
       (b) Table of Sections.--The table of sections for this Act 
     is as follows:'

Sec. 1. Short title; table of sections.
Sec. 2. Findings and purposes.
Sec. 3. Definitions.
Sec. 4. Application of Act.
Sec. 5. Punitive damages limitations.
Sec. 6. Proportionate liability.
Sec. 7. Pre-litigation notice.
Sec. 8. Pleading requirements.
Sec. 9. Duty to mitigate.
Sec. 10. Application of existing impossibility or commercial 
              impracticability doctrines.
Sec. 11. Damages limitation by contract.
Sec. 12. Damages in tort claims.
Sec. 13. State of mind; bystander liability; control.
Sec. 14. Liability of officers, directors, and employees.
Sec. 15. Appointment of special masters or magistrates for Y2K actions.
Sec. 16. Y2K actions as class actions.

     SEC. 2. FINDINGS AND PURPOSES.

       (a) Findings.--The Congress finds that:
       (1)(A) Many information technology systems, devices, and 
     programs are not capable of recognizing certain dates in 1999 
     and after December 31, 1999, and will read dates in the year 
     2000 and thereafter as if those dates represent the year 1900 
     or thereafter or will fail to process dates after December 
     31, 1999.
       (B) If not corrected, the problem described in subparagraph 
     (A) and resulting failures could incapacitate systems that 
     are essential to the functioning of markets, commerce, 
     consumer products, utilities, Government, and safety and 
     defense systems, in the United States and throughout the 
     world.
       (2) It is in the national interest that producers and users 
     of technology products concentrate their attention and 
     resources in the time remaining before January 1, 2000, on 
     assessing, fixing, testing, and developing contingency plans 
     to address any and all outstanding year 2000 computer date-
     change problems, so as to minimize possible disruptions 
     associated with computer failures.
       (3)(A) Because year 2000 computer date-change problems may 
     affect virtually all businesses and other users of technology 
     products to some degree, there is a substantial likelihood 
     that actual or potential year 2000 failures will prompt a 
     significant volume of litigation, much of it insubstantial.
       (B) The litigation described in subparagraph (A) would have 
     a range of undesirable effects, including the following:
       (i) It would threaten to waste technical and financial 
     resources that are better devoted to curing year 2000 
     computer date-change problems and ensuring that systems 
     remain or become operational.
       (ii) It could threaten the network of valued and trusted 
     business and customer relationships that are important to the 
     effective functioning of the national economy.
       (iii) It would strain the Nation's legal system, causing 
     particular problems for the small businesses and individuals 
     who already find that system inaccessible because of its 
     complexity and expense.
       (iv) The delays, expense, uncertainties, loss of control, 
     adverse publicity, and animosities that frequently accompany 
     litigation of business disputes could exacerbate the 
     difficulties associated with the date change and work against 
     the successful resolution of those difficulties.
       (4) It is appropriate for the Congress to enact legislation 
     to assure that Y2K problems do not unnecessarily disrupt 
     interstate commerce or create unnecessary caseloads in 
     Federal courts and to provide initiatives to help businesses 
     prepare and be in a position to withstand the potentially 
     devastating economic impact of Y2K.
       (5) Resorting to the legal system for resolution of Y2K 
     problems is not feasible for many businesses and individuals 
     who already find the legal system inaccessible, particularly 
     small businesses and individuals who already find the legal 
     system inaccessible, because of its complexity and expense.
       (6) The delays, expense, uncertainties, loss of control, 
     adverse publicity, and animosities that frequently accompany 
     litigation of business disputes can only exacerbate the 
     difficulties associated with Y2K date change, and work 
     against the successful resolution of those difficulties.
       (7) Concern about the potential for liability--in 
     particular, concern about the substantial litigation expense 
     associated with defending against even the most insubstantial 
     lawsuits--is prompting many persons and businesses with 
     technical expertise to avoid projects aimed at curing year 
     2000 computer date-change problems.
       (8) A proliferation of frivolous Y2K lawsuits by 
     opportunistic parties may further limit access to courts by 
     straining the resources of the legal system and depriving 
     deserving parties of their legitimate rights to relief.
       (9) Congress encourages businesses to approach their Y2K 
     disputes responsibly, and to avoid unnecessary, time-
     consuming and costly litigation about Y2K failures, 
     particularly those that are not material. Congress supports 
     good faith negotiations between parties when there is a 
     dispute over a Y2K problem, and, if necessary, urges the 
     parties to enter into voluntary, non-binding mediation rather 
     than litigation.
       (b) Purposes.--Based upon the power of the Congress under 
     Article I, Section 8, Clause 3 of the Constitution of the 
     United States, the purposes of this Act are--
       (1) to establish uniform legal standards that give all 
     businesses and users of technology products reasonable 
     incentives to solve Y2K computer date-change problems before 
     they develop;
       (2) to encourage continued Y2K remediation and testing 
     efforts by providers, suppliers, customers, and other 
     contracting partners;
       (3) to encourage private and public parties alike to 
     resolve Y2K disputes by alternative dispute mechanisms in 
     order to avoid costly and time-consuming litigation, to 
     initiate those mechanisms as early as possible, and to 
     encourage the prompt identification and correction of Y2K 
     problems; and
       (4) to lessen the burdens on interstate commerce by 
     discouraging insubstantial lawsuits while preserving the 
     ability of individuals and businesses that have suffered real 
     injury to obtain complete relief.

     SEC. 3. DEFINITIONS.

       In this Act:
       (1) Y2K action.--The term ``Y2K action''--

[[Page 7512]]

       (A) means a civil action commenced in any Federal or State 
     court, or an agency board of contract appeal proceeding, in 
     which the plaintiff's alleged harm or injury resulted 
     directly or indirectly from an actual or potential Y2K 
     failure, or a claim or defense is related directly or 
     indirectly to an actual or potential Y2K failure;
       (B) includes a civil action commenced in any Federal or 
     State court by a governmental entity when acting in a 
     commercial or contracting capacity; but
       (C) does not include an action brought by a governmental 
     entity acting in a regulatory, supervisory, or enforcement 
     capacity.
       (2) Y2K failure.--The term ``Y2K failure'' means failure by 
     any device or system (including any computer system and any 
     microchip or integrated circuit embedded in another device or 
     product), or any software, firmware, or other set or 
     collection of processing instructions to process, to 
     calculate, to compare, to sequence, to display, to store, to 
     transmit, or to receive year-2000 date-related data, 
     including failures--
       (A) to deal with or account for transitions or comparisons 
     from, into, and between the years 1999 and 2000 accurately;
       (B) to recognize or accurately to process any specific date 
     in 1999, 2000, or 2001; or
       (C) accurately to account for the year 2000's status as a 
     leap year, including recognition and processing of the 
     correct date on February 29, 2000.
       (3) Government entity.--The term ``government entity'' 
     means an agency, instrumentality, or other entity of Federal, 
     State, or local government (including multijurisdictional 
     agencies, instrumentalities, and entities).
       (4) Material defect.--The term ``material defect'' means a 
     defect in any item, whether tangible or intangible, or in the 
     provision of a service, that substantially prevents the item 
     or service from operating or functioning as designed or 
     according to its specifications. The term ``material defect'' 
     does not include a defect that--
       (A) has an insignificant or de minimis effect on the 
     operation or functioning of an item or computer program;
       (B) affects only a component of an item or program that, as 
     a whole, substantially operates or functions as designed; or
       (C) has an insignificant or de minimis effect on the 
     efficacy of the service provided.
       (5) Personal injury.--The term ``personal injury'' means 
     physical injury to a natural person, including--
       (A) death as a result of a physical injury; and
       (B) mental suffering, emotional distress, or similar 
     injuries suffered by that person in connection with a 
     physical injury.
       (6) State.--The term ``State'' means any State of the 
     United States, the District of Columbia, Commonwealth of 
     Puerto Rico, the Northern Mariana Islands, the United States 
     Virgin Islands, Guam, American Samoa, and any other territory 
     or possession of the United States, and any political 
     subdivision thereof.
       (7) Contract.--The term ``contract'' means a contract, 
     tariff, license, or warranty.
       (8) Alternative dispute resolution.--The term ``alternative 
     dispute resolution'' means any process or proceeding, other 
     than adjudication by a court or in an administrative 
     proceeding, to assist in the resolution of issues in 
     controversy, through processes such as early neutral 
     evaluation, mediation, minitrial, and arbitration.

     SEC. 4. APPLICATION OF ACT.

       (a) General Rule.--This Act applies to any Y2K action 
     brought in a State or Federal court after February 22, 1999, 
     for a Y2K failure occurring before January 1, 2003, including 
     any appeal, remand, stay, or other judicial, administrative, 
     or alternative dispute resolution proceeding in such an 
     action.
       (b) No New Cause of Action Created.--Nothing in this Act 
     creates a new cause of action, and, except as otherwise 
     explicitly provided in this Act, nothing in this Act expands 
     any liability otherwise imposed or limits any defense 
     otherwise available under Federal or State law.
       (c) Claims for Personal Injury or Wrongful Death 
     Excluded.--This Act does not apply to a claim for personal 
     injury or for wrongful death.
       (d) Contract Preservation.--
       (1) In general.--Subject to paragraph (2), in any Y2K 
     action any written contractual term, including a limitation 
     or an exclusion of liability, or a disclaimer of warranty, 
     shall be strictly enforced unless the enforcement of that 
     term would manifestly and directly contravene applicable 
     State law embodied in any statute in effect on January 1, 
     1999, specifically addressing that term.
       (2) Interpretation of contract.--In any Y2K action in which 
     a contract to which paragraph (1) applies is silent as to a 
     particular issue, the interpretation of the contract as to 
     that issue shall be determined by applicable law in effect at 
     the time the contract was executed.
       (e) Preemption of State Law.--This Act supersedes State law 
     to the extent that it establishes a rule of law applicable to 
     a Y2K action that is inconsistent with State law, but nothing 
     in this Act implicates, alters, or diminishes the ability of 
     a State to defend itself against any claim on the basis of 
     sovereign immunity.

     SEC. 5. PUNITIVE DAMAGES LIMITATIONS.

       (a) In General.--In any Y2K action in which punitive 
     damages are permitted by applicable law, the defendant shall 
     not be liable for punitive damages unless the plaintiff 
     proves by clear and convincing evidence that the applicable 
     standard for awarding damages has been met.



       (b) Caps on Punitive Damages.--
       (1) In general.--Subject to the evidentiary standard 
     established by subsection (a), punitive damages permitted 
     under applicable law against a defendant in such a Y2K action 
     may not exceed the larger of--
       (A) 3 times the amount awarded for compensatory damages; or
       (B) $250,000.
       (2) Special rule.--In the case of a defendant--
       (A) who--
       (i) is sued in his or her capacity as an individual; and
       (ii) whose net worth does not exceed $500,000; or
       (B) that is an unincorporated business, a partnership, 
     corporation, association, unit of local government, or 
     organization with fewer than 25 full-time employees,

     paragraph (1) shall be applied by substituting ``smaller'' 
     for ``larger''.
       (3) No cap if injury specifically intended.--Neither 
     paragraph (1) nor paragraph (2) applies if the plaintiff 
     establishes by clear and convincing evidence that the 
     defendant acted with specific intent to injure the plaintiff.
       (c) Government Entities.--Punitive damages in a Y2K action 
     may not be awarded against a government entity.

     SEC. 6. PROPORTIONATE LIABILITY.

       (a) In General.--Except as provided in subsections (b) and 
     (c), a person against whom a final judgment is entered in a 
     Y2K action shall be liable solely for the portion of the 
     judgment that corresponds to the relative and proportional 
     responsibility of that person. In determining the percentage 
     of responsibility of any defendant, the trier of fact shall 
     determine that percentage as a percentage of the total fault 
     of all persons, including the plaintiff, who caused or 
     contributed to the total loss incurred by the plaintiff.
       (b) Proportionate Liability.--
       (1) Determination of responsibility.--In any Y2K action, 
     the court shall instruct the jury to answer special 
     interrogatories, or, if there is no jury, the court shall 
     make findings with respect to each defendant, including 
     defendants who have entered into settlements with the 
     plaintiff or plaintiffs, concerning--
       (A) the percentage of responsibility, if any, of each 
     defendant, measured as a percentage of the total fault of all 
     persons who caused or contributed to the loss incurred by the 
     plaintiff; and
       (B) if alleged by the plaintiff, whether the defendant--
       (i) acted with specific intent to injure the plaintiff; or
       (ii) knowingly committed fraud.
       (2) Contents of special interrogatories or findings.--The 
     responses to interrogatories or findings under paragraph (1) 
     shall specify the total amount of damages that the plaintiff 
     is entitled to recover and the percentage of responsibility 
     of each defendant found to have caused or contributed to the 
     loss incurred by the plaintiff.
       (3) Factors for consideration.--In determining the 
     percentage of responsibility under this subsection, the trier 
     of fact shall consider--
       (A) the nature of the conduct of each person found to have 
     caused or contributed to the loss incurred by the plaintiff; 
     and
       (B) the nature and extent of the causal relationship 
     between the conduct of each defendant and the damages 
     incurred by the plaintiff.
       (c) Joint Liability for Specific Intent or Fraud.--
       (1) In general.--Notwithstanding subsection (a), the 
     liability of a defendant in a Y2K action is joint and several 
     if the trier of fact specifically determines that the 
     defendant--
       (A) acted with specific intent to injure the plaintiff; or
       (B) knowingly committed fraud.
       (2) Fraud; recklessness.--
       (A) Knowing commission of fraud described.--For purposes of 
     subsection (b)(1)(B)(ii) and paragraph (1)(B) of this 
     subsection, a defendant knowingly committed fraud if the 
     defendant--
       (i) made an untrue statement of a material fact, with 
     actual knowledge that the statement was false;
       (ii) omitted a fact necessary to make the statement not be 
     misleading, with actual knowledge that, as a result of the 
     omission, the statement was false; and
       (iii) knew that the plaintiff was reasonably likely to rely 
     on the false statement.
       (B) Recklessness.--For purposes of subsection (b)(1)(B) and 
     paragraph (1) of this subsection, reckless conduct by the 
     defendant does not constitute either a specific intent to 
     injure, or the knowing commission of fraud, by the defendant.
       (3) Right to contribution not affected.--Nothing in this 
     section affects the right, under any other law, of a 
     defendant to contribution with respect to another defendant 
     found under subsection (b)(1)(B), or determined under 
     paragraph (1)(B) of this subsection, to have acted with 
     specific intent to

[[Page 7513]]

     injure the plaintiff or to have knowingly committed fraud.
       (d) Special Rules.--
       (1) Uncollectible share.--
       (A) In general.--Notwithstanding subsection (a), if, upon 
     motion made not later than 6 months after a final judgment is 
     entered in any Y2K action, the court determines that all or 
     part of the share of the judgment against a defendant for 
     compensatory damages is not collectible against that 
     defendant, then each other defendant in the action is liable 
     for the uncollectible share as follows:
       (i) Percentage of net worth.--The other defendants are 
     jointly and severally liable for the uncollectible share if 
     the plaintiff establishes that--
       (I) the plaintiff is an individual whose recoverable 
     damages under the final judgment are equal to more than 10 
     percent of the net worth of the plaintiff; and
       (II) the net worth of the plaintiff is less than $200,000.
       (ii) Other plaintiffs.--For a plaintiff not described in 
     clause (i), each of the other defendants is liable for the 
     uncollectible share in proportion to the percentage of 
     responsibility of that defendant, except that the total 
     liability of a defendant under this clause may not exceed 50 
     percent of the proportionate share of that defendant, as 
     determined under subsection (b)(2).
       (B) Overall limit.--The total payments required under 
     subparagraph (A) from all defendants may not exceed the 
     amount of the uncollectible share.
       (C) Subject to contribution.--A defendant against whom 
     judgment is not collectible is subject to contribution and to 
     any continuing liability to the plaintiff on the judgment.
       (2) Special right of contribution.--To the extent that a 
     defendant is required to make an additional payment under 
     paragraph (1), that defendant may recover contribution--
       (A) from the defendant originally liable to make the 
     payment;
       (B) from any other defendant that is jointly and severally 
     liable;
       (C) from any other defendant held proportionately liable 
     who is liable to make the same payment and has paid less than 
     that other defendant's proportionate share of that payment; 
     or
       (D) from any other person responsible for the conduct 
     giving rise to the payment that would have been liable to 
     make the same payment.
       (3) Nondisclosure to jury.--The standard for allocation of 
     damages under subsection (a) and subsection (b)(1), and the 
     procedure for reallocation of uncollectible shares under 
     paragraph (1) of this subsection, shall not be disclosed to 
     members of the jury.
       (e) Settlement Discharge.--
       (1) In general.--A defendant who settles a Y2K action at 
     any time before final verdict or judgment shall be discharged 
     from all claims for contribution brought by other persons. 
     Upon entry of the settlement by the court, the court shall 
     enter a bar order constituting the final discharge of all 
     obligations to the plaintiff of the settling defendant 
     arising out of the action. The order shall bar all future 
     claims for contribution arising out of the action--
       (A) by any person against the settling defendant; and
       (B) by the settling defendant against any person other than 
     a person whose liability has been extinguished by the 
     settlement of the settling defendant.
       (2) Reduction.--If a defendant enters into a settlement 
     with the plaintiff before the final verdict or judgment, the 
     verdict or judgment shall be reduced by the greater of--
       (A) an amount that corresponds to the percentage of 
     responsibility of that defendant; or
       (B) the amount paid to the plaintiff by that defendant.
       (f) General Right of Contribution.--
       (1) In general.--A defendant who is jointly and severally 
     liable for damages in any Y2K action may recover contribution 
     from any other person who, if joined in the original action, 
     would have been liable for the same damages. A claim for 
     contribution shall be determined based on the percentage of 
     responsibility of the claimant and of each person against 
     whom a claim for contribution is made.
       (2) Statute of limitations for contribution.--An action for 
     contribution in connection with a Y2K action shall be brought 
     not later than 6 months after the entry of a final, 
     nonappealable judgment in the Y2K action, except than an 
     action for contribution brought by a defendant who was 
     required to make an additional payment under subsection 
     (d)(1) may be brought not later than 6 months after the date 
     on which such payment was made.
       (g) More Protective State Law Not Preempted.--Nothing in 
     this section pre-empts or supersedes any provision of State 
     statutory law that--
       (1) limits the liability of a defendant in a Y2K action to 
     a lesser amount than the amount determined under this 
     section; or
       (2) otherwise affords a greater degree of protection from 
     joint or several liability than is afforded by this section.

     SEC. 7. PRE-LITIGATION NOTICE.

       (a) In General.--Before commencing a Y2K action, except an 
     action that seeks only injunctive relief, a prospective 
     plaintiff with a Y2K claim shall send a written notice by 
     certified mail to each prospective defendant in that action. 
     The notice shall provide specific and detailed information 
     about--
       (1) the manifestations of any material defect alleged to 
     have caused harm or loss;
       (2) the harm or loss allegedly suffered by the prospective 
     plaintiff;
       (3) how the prospective plaintiff would like the 
     prospective defendant to remedy the problem;
       (4) the basis upon which the prospective plaintiff seeks 
     that remedy; and
       (5) the name, title, address, and telephone number of any 
     individual who has authority to negotiate a resolution of the 
     dispute on behalf of the prospective plaintiff.
       (b) Person to Whom Notice To Be Sent.--The notice required 
     by subsection (a) shall be sent--
       (1) to the registered agent of the prospective defendant 
     for service of legal process;
       (2) if the prospective defendant does not have a registered 
     agent, then to the chief executive officer of a corporation, 
     the managing partner of a partnership, the proprietor of a 
     sole proprietorship, or to a similarly-situated person for 
     any other enterprise; or
       (3) if the prospective defendant has designated a person to 
     receive pre-litigation notices on a Year 2000 Internet 
     Website (as defined in section 3(7) of the Year 2000 
     Information and Readiness Disclosure Act), to the designated 
     person, if the prospective plaintiff has reasonable access to 
     the Internet.
       (c) Response to Notice.--
       (1) In general.--Within 30 days after receipt of the notice 
     specified in subsection (a), each prospective defendant shall 
     send by certified mail with return receipt requested to each 
     prospective plaintiff a written statement acknowledging 
     receipt of the notice, and describing the actions it has 
     taken or will take to address the problem identified by the 
     prospective plaintiff.
       (2) Willingness to engage in adr.--The written statement 
     shall state whether the prospective defendant is willing to 
     engage in alternative dispute resolution.
       (3) Inadmissibility.--A written statement required by this 
     paragraph is not admissible in evidence, under Rule 408 of 
     the Federal Rules of Evidence or any analogous rule of 
     evidence in any State, in any proceeding to prove liability 
     for, or the invalidity of, a claim or its amount, or 
     otherwise as evidence of conduct or statements made in 
     compromise negotiations.
       (4) Presumptive time of receipt.--For purposes of paragraph 
     (1), a notice under subsection (a) is presumed to be received 
     7 days after it was sent.
       (d) Failure To Respond.--If a prospective defendant--
       (1) fails to respond to a notice provided pursuant to 
     subsection (a) within the 30 days specified in subsection 
     (c)(1); or
       (2) does not describe the action, if any, the prospective 
     defendant has taken, or will take, to address the problem 
     identified by the prospective plaintiff,

     the prospective plaintiff may immediately commence a legal 
     action against that prospective defendant.
       (e) Remediation Period.--
       (1) In general.--If the prospective defendant responds and 
     proposes remedial action it will take, or offers to engage in 
     alternative dispute resolution, then the prospective 
     plaintiff shall allow the prospective defendant an additional 
     60 days from the end of the 30-day notice period to complete 
     the proposed remedial action before commencing a legal action 
     against that prospective defendant.
       (2) Extension by agreement.--The prospective plaintiff and 
     prospective defendant may change the length of the 60-day 
     remediation period by written agreement.
       (3) Multiple extensions not allowed.--Except as provided in 
     paragraph (2), a defendant in a Y2K action is entitled to no 
     more than one 30-day period and one 60-day remediation period 
     under paragraph (1).
       (4) Statutes of limitation, etc., tolled.--Any applicable 
     statute of limitations or doctrine of laches in a Y2K action 
     to which paragraph (1) applies shall be tolled during the 
     notice and remediation period under that paragraph.
       (f) Failure to Provide Notice.--If a defendant determines 
     that a plaintiff has filed a Y2K action without providing the 
     notice specified in subsection (a) or without awaiting the 
     expiration of the appropriate waiting period specified in 
     subsection (c), the defendant may treat the plaintiff's 
     complaint as such a notice by so informing the court and the 
     plaintiff. If any defendant elects to treat the complaint as 
     such a notice--
       (1) the court shall stay all discovery and all other 
     proceedings in the action for the appropriate period after 
     filing of the complaint; and
       (2) the time for filing answers and all other pleadings 
     shall be tolled during the appropriate period.
       (g) Effect of Contractual or Statutory Waiting Periods.--In 
     cases in which a contract, or a statute enacted before 
     January 1, 1999, requires notice of non-performance and 
     provides for a period of delay prior to the initiation of 
     suit for breach or repudiation of contract, the period of 
     delay provided by

[[Page 7514]]

     contract or the statute is controlling over the waiting 
     period specified in subsections (c) and (d).
       (h) State Law Controls Alternative Methods.--Nothing in 
     this section supersedes or otherwise preempts any State law 
     or rule of civil procedure with respect to the use of 
     alternative dispute resolution for Y2K actions.
       (i) Provisional Remedies Unaffected.--Nothing in this 
     section interferes with the right of a litigant to 
     provisional remedies otherwise available under Rule 65 of the 
     Federal Rules of Civil Procedure or any State rule of civil 
     procedure providing extraordinary or provisional remedies in 
     any civil action in which the underlying complaint seeks both 
     injunctive and monetary relief.
       (j) Special Rule for Class Actions.--For the purpose of 
     applying this section to a Y2K action that is maintained as a 
     class action in Federal or State court, the requirements of 
     the preceding subsections of this section apply only to named 
     plaintiffs in the class action.

     SEC. 8. PLEADING REQUIREMENTS.

       (a) Application With Rules of Civil Procedure.--This 
     section applies exclusively to Y2K actions and, except to the 
     extent that this section requires additional information to 
     be contained in or attached to pleadings, nothing in this 
     section is intended to amend or otherwise supersede 
     applicable rules of Federal or State civil procedure.
       (b) Nature and Amount of Damages.--In all Y2K actions in 
     which damages are requested, there shall be filed with the 
     complaint a statement of specific information as to the 
     nature and amount of each element of damages and the factual 
     basis for the damages calculation.
       (c) Material Defects.--In any Y2K action in which the 
     plaintiff alleges that there is a material defect in a 
     product or service, there shall be filed with the complaint a 
     statement of specific information regarding the 
     manifestations of the material defects and the facts 
     supporting a conclusion that the defects are material.
       (d) Required State of Mind.--In any Y2K action in which a 
     claim is asserted on which the plaintiff may prevail only on 
     proof that the defendant acted with a particular state of 
     mind, there shall be filed with the complaint, with respect 
     to each element of that claim, a statement of the facts 
     giving rise to a strong inference that the defendant acted 
     with the required state of mind.

     SEC. 9. DUTY TO MITIGATE.

       Damages awarded in any Y2K action shall exclude 
     compensation for damages the plaintiff could reasonably have 
     avoided in light of any disclosure or other information of 
     which the plaintiff was, or reasonably should have been, 
     aware, including information made available by the defendant 
     to purchasers or users of the defendant's product or services 
     concerning means of remedying or avoiding the Y2K failure.

     SEC. 10. APPLICATION OF EXISTING IMPOSSIBILITY OR COMMERCIAL 
                   IMPRACTICABILITY DOCTRINES.

       In any Y2K action for breach or repudiation of contract, 
     the applicability of the doctrines of impossibility and 
     commercial impracticability shall be determined by the law in 
     existence on January 1, 1999. Nothing in this Act shall be 
     construed as limiting or impairing a party's right to assert 
     defenses based upon such doctrines.

     SEC. 11. DAMAGES LIMITATION BY CONTRACT.

       In any Y2K action for breach or repudiation of contract, no 
     party may claim, nor be awarded, any category of damages 
     unless such damages are allowed--
       (1) by the express terms of the contract; or
       (2) if the contract is silent on such damages, by operation 
     of State law at the time the contract was effective or by 
     operation of Federal law.

     SEC. 12. DAMAGES IN TORT CLAIMS.

       (a) In General.--A party to a Y2K action making a tort 
     claim may not recover damages for economic loss unless--
       (1) the recovery of such losses is provided for in a 
     contract to which the party seeking to recover such losses is 
     a party; or
       (2) such losses result directly from damage to tangible 
     personal or real property caused by the Y2K failure (other 
     than damage to property that is the subject of the contract 
     between the parties to the Y2K action or, in the event there 
     is no contract between the parties, other than damage caused 
     only to the property that experienced the Y2K failure),

     and such damages are permitted under applicable State law.
       (b) Economic Loss.--For purposes of this section only, and 
     except as otherwise specifically provided in a valid and 
     enforceable written contract between the plaintiff and the 
     defendant in a Y2K action, the term ``economic loss''--
       (1) means amounts awarded to compensate an injured party 
     for any loss other than losses described in subsection 
     (a)(2); and
       (2) includes amounts awarded for damages such as--
       (A) lost profits or sales;
       (B) business interruption;
       (C) losses indirectly suffered as a result of the 
     defendant's wrongful act or omission;
       (D) losses that arise because of the claims of third 
     parties;
       (E) losses that must be plead as special damages; and
       (F) consequential damages (as defined in the Uniform 
     Commercial Code or analogous State commercial law).
       (c) Certain Actions Excluded.--This section does not 
     affect, abrogate, amend, or alter any patent, copyright, 
     trade-secret, trademark, or service-mark action, or any claim 
     for defamation or invasion of privacy under Federal or State 
     law.
       (d) Certain Other Actions.--A person liable for damages, 
     whether by settlement or judgment, in a civil action to which 
     this Act does not apply because of section 4(c), whose 
     liability, in whole or in part, is the result of a Y2K 
     failure may, notwithstanding any other provision of this Act, 
     pursue any remedy otherwise available under Federal or State 
     law against the person responsible for that Y2K failure to 
     the extent of recovering the amount of those damages.

     SEC. 13. STATE OF MIND; BYSTANDER LIABILITY; CONTROL.

       (a) Defendant's State of Mind.--In a Y2K action other than 
     a claim for breach of repudiation of contract, and in which 
     the defendant's actual or constructive awareness of an actual 
     or potential Y2K failure is an element of the claim, the 
     defendant is not liable unless the plaintiff establishes that 
     elements of the claim by clear and convincing evidence.
       (b) Limitation on Bystander Liability for Y2K Failures.--
       (1) In general.--With respect to any Y2K action for money 
     damages in which--
       (A) the defendant is not the manufacturer, seller, or 
     distributor of a product, or the provider of a service, that 
     suffers or causes the Y2K failure at issue;
       (B) the plaintiff is not in substantial privity with the 
     defendant; and
       (C) the defendant's actual or constructive awareness of an 
     actual or potential Y2K failure is an element of the claim 
     under applicable law,

     the defendant shall not be liable unless the plaintiff, in 
     addition to establishing all other requisite elements of the 
     claim, proves by clear and convincing evidence that the 
     defendant actually knew, or recklessly disregarded a known 
     and substantial risk, that such failure would occur.
       (2) Substantial privity.--For purposes of paragraph (1)(B), 
     a plaintiff and a defendant are in substantial privity when, 
     in a Y2K action arising out of the performance of 
     professional services, the plaintiff and the defendant either 
     have contractual relations with one another or the plaintiff 
     is a person who, prior to the defendant's performance of such 
     services, was specifically identified to and acknowledged by 
     the defendant as a person for whose special benefit the 
     services were being performed.
       (3) Certain claims excluded.--For purposes of paragraph 
     (1)(C), claims in which the defendant's actual or 
     constructive awareness of an actual or potential Y2K failure 
     is an element of the claim under applicable law do not 
     include claims for negligence but do include claims such as 
     fraud, constructive fraud, breach of fiduciary duty, 
     negligent misrepresentation, and interference with contract 
     or economic advantage.
       (c) Control Not Determinative of Liability.--The fact that 
     a Y2K failure occurred in an entity, facility, system, 
     product, or component that was sold, leased, rented, or 
     otherwise within the control of the party against whom a 
     claim is asserted in a Y2K action shall not constitute the 
     sole basis for recovery of damages in that action. A claim in 
     a Y2K action for breach or repudiation of contract for such a 
     failure is governed by the terms of the contract.

     SEC. 14. LIABILITY OF OFFICERS, DIRECTORS, AND EMPLOYEES.

       (a) In General.--A director, officer, trustee, or employee 
     of a business or other organization (including a corporation, 
     unincorporated association, partnership, or non-profit 
     organization) is not personally liable in any Y2K action in 
     that person's capacity as a director, officer, trustee, or 
     employee of the business or organization for more than the 
     greater of--
       (1) $100,000; or
       (2) the amount of pre-tax compensation received by the 
     director, officer, trustee, or employee from the business or 
     organization during the 12 months immediately preceding the 
     act or omission for which liability is imposed.
       (b) Exception.--Subsection (a) does not apply in any Y2K 
     action in which it is found by clear and convincing evidence 
     that the director, officer, trustee, or employee--
       (1) made statements intended to be misleading regarding any 
     actual or potential year 2000 problem; or
       (2) withheld from the public significant information there 
     was a legal duty to disclose regarding any actual or 
     potential year 2000 problem of that business or organization 
     which would likely result in actionable Y2K failure.
       (c) State Law, Charter, or Bylaws.--Nothing in this section 
     supersedes any provision of State law, charter, or a bylaw 
     authorized by State law in existence on January 1, 1999, that 
     establishes lower financial limits on the liability of a 
     director, officer, trustee, or employee of such a business or 
     organization.

     SEC. 15. APPOINTMENT OF SPECIAL MASTERS OR MAGISTRATES FOR 
                   Y2K ACTIONS.

       Any District Court of the United States in which a Y2K 
     action is pending may appoint

[[Page 7515]]

     a special master or a magistrate to hear the matter and to 
     make findings of fact and conclusions of law in accordance 
     with Rule 53 of the Federal Rules of Civil Procedure.

     SEC. 16. Y2K ACTIONS AS CLASS ACTIONS.

       (a) Material Defect Requirement.--A Y2K action involving a 
     claim that a product or service is defective may be 
     maintained as a class action in Federal or State court as to 
     that claim only if--
       (1) it satisfies all other prerequisites established by 
     applicable Federal or State law, including applicable rules 
     of civil procedure; and
       (2) the court finds that the defect in a product or service 
     as alleged would be a material defect for the majority of the 
     members of the class.
       (b) Notification.--In any Y2K action that is maintained as 
     a class action, the court, in addition to any other notice 
     required by applicable Federal or State law, shall direct 
     notice of the action to each member of the class, which shall 
     include--
       (1) a concise and clear description of the nature of the 
     action;
       (2) the jurisdiction where the case is pending; and
       (3) the fee arrangements with class counsel, including the 
     hourly fee being charged, or, if it is a contingency fee, the 
     percentage of the final award which will be paid, including 
     an estimate of the total amount that would be paid if the 
     requested damages were to be granted.
       (c) Forum for Y2K Class Actions.--
       (1) Jurisdiction.--Except as provided in paragraph (2), a 
     Y2K action may be brought as a class action in a United 
     States District Court or removed to a United States District 
     Court if the amount in controversy is greater than the sum or 
     value of $1,000,000 (exclusive of interest and costs), 
     computed on the basis of all claims to be determined in the 
     action.
       (2) Exception.--A Y2K action may not be brought or removed 
     as a class action under this section if--
       (A)(i) a substantial majority of the members of the 
     proposed plaintiff class are citizens of a single State;
       (ii) the primary defendants are citizens of that State; and
       (iii) the claims asserted will be governed primarily by the 
     law of that State, or

       (B) the primary defendants are States, State officials, or 
     other governmental entities against whom the United States 
     District Court may be foreclosed from ordering relief.
       (d) Effect on Rules of Civil Procedures.--Except as 
     otherwise provided in this section, nothing in this section 
     supersedes any rule of Federal or State civil procedure 
     applicable to class actions.
                                 ______
                                 

                         LOTT AMENDMENT NO. 268

  Mr. LOTT proposed an amendment to amendment No. 267 proposed by him 
to the bill, S. 96, supra; as follows:

       Strike all after the word ``section'' and insert the 
     following:

     1. SHORT TITLE; TABLE OF SECTIONS.

       (a) Short Title.--This Act may be cited as the ``Y2K Act''.
       (b) Table of Sections.--The table of sections for this Act 
     is as follows:'

Sec. 1. Short title; table of sections.
Sec. 2. Findings and purposes.
Sec. 3. Definitions.
Sec. 4. Application of Act.
Sec. 5. Punitive damages limitations.
Sec. 6. Proportionate liability.
Sec. 7. Pre-litigation notice.
Sec. 8. Pleading requirements.
Sec. 9. Duty to mitigate.
Sec. 10. Application of existing impossibility or commercial 
              impracticability doctrines.
Sec. 11. Damages limitation by contract.
Sec. 12. Damages in tort claims.
Sec. 13. State of mind; bystander liability; control.
Sec. 14. Liability of officers, directors, and employees.
Sec. 15. Appointment of special masters or magistrates for Y2K actions.
Sec. 16. Y2K actions as class actions.

     SEC. 2. FINDINGS AND PURPOSES.

       (a) Findings.--The Congress finds that:
       (1)(A) Many information technology systems, devices, and 
     programs are not capable of recognizing certain dates in 1999 
     and after December 31, 1999, and will read dates in the year 
     2000 and thereafter as if those dates represent the year 1900 
     or thereafter or will fail to process dates after December 
     31, 1999.
       (B) If not corrected, the problem described in subparagraph 
     (A) and resulting failures could incapacitate systems that 
     are essential to the functioning of markets, commerce, 
     consumer products, utilities, Government, and safety and 
     defense systems, in the United States and throughout the 
     world.
       (2) It is in the national interest that producers and users 
     of technology products concentrate their attention and 
     resources in the time remaining before January 1, 2000, on 
     assessing, fixing, testing, and developing contingency plans 
     to address any and all outstanding year 2000 computer date-
     change problems, so as to minimize possible disruptions 
     associated with computer failures.
       (3)(A) Because year 2000 computer date-change problems may 
     affect virtually all businesses and other users of technology 
     products to some degree, there is a substantial likelihood 
     that actual or potential year 2000 failures will prompt a 
     significant volume of litigation, much of it insubstantial.
       (B) The litigation described in subparagraph (A) would have 
     a range of undesirable effects, including the following:
       (i) It would threaten to waste technical and financial 
     resources that are better devoted to curing year 2000 
     computer date-change problems and ensuring that systems 
     remain or become operational.
       (ii) It could threaten the network of valued and trusted 
     business and customer relationships that are important to the 
     effective functioning of the national economy.
       (iii) It would strain the Nation's legal system, causing 
     particular problems for the small businesses and individuals 
     who already find that system inaccessible because of its 
     complexity and expense.
       (iv) The delays, expense, uncertainties, loss of control, 
     adverse publicity, and animosities that frequently accompany 
     litigation of business disputes could exacerbate the 
     difficulties associated with the date change and work against 
     the successful resolution of those difficulties.
       (4) It is appropriate for the Congress to enact legislation 
     to assure that Y2K problems do not unnecessarily disrupt 
     interstate commerce or create unnecessary caseloads in 
     Federal courts and to provide initiatives to help businesses 
     prepare and be in a position to withstand the potentially 
     devastating economic impact of Y2K.
       (5) Resorting to the legal system for resolution of Y2K 
     problems is not feasible for many businesses and individuals 
     who already find the legal system inaccessible, particularly 
     small businesses and individuals who already find the legal 
     system inaccessible, because of its complexity and expense.
       (6) The delays, expense, uncertainties, loss of control, 
     adverse publicity, and animosities that frequently accompany 
     litigation of business disputes can only exacerbate the 
     difficulties associated with Y2K date change, and work 
     against the successful resolution of those difficulties.
       (7) Concern about the potential for liability--in 
     particular, concern about the substantial litigation expense 
     associated with defending against even the most insubstantial 
     lawsuits--is prompting many persons and businesses with 
     technical expertise to avoid projects aimed at curing year 
     2000 computer date-change problems.
       (8) A proliferation of frivolous Y2K lawsuits by 
     opportunistic parties may further limit access to courts by 
     straining the resources of the legal system and depriving 
     deserving parties of their legitimate rights to relief.
       (9) Congress encourages businesses to approach their Y2K 
     disputes responsibly, and to avoid unnecessary, time-
     consuming and costly litigation about Y2K failures, 
     particularly those that are not material. Congress supports 
     good faith negotiations between parties when there is a 
     dispute over a Y2K problem, and, if necessary, urges the 
     parties to enter into voluntary, non-binding mediation rather 
     than litigation.
       (b) Purposes.--Based upon the power of the Congress under 
     Article I, Section 8, Clause 3 of the Constitution of the 
     United States, the purpose of this Act are--
       (1) to establish uniform legal standards that give all 
     businesses and users of technology products reasonable 
     incentives to solve Y2K computer date-change problems before 
     they develop;
       (2) to encourage continued Y2K remediation and testing 
     efforts by providers, suppliers, customers, and other 
     contracting partners;
       (3) to encourage private and public parties alike to 
     resolve Y2K disputes by alternative dispute mechanisms in 
     order to avoid costly and time-consuming litigation, to 
     initiate those mechanisms as early as possible, and to 
     encourage the prompt identification and correction of Y2K 
     problems; and
       (4) to lessen the burdens on interstate commerce by 
     discouraging insubstantial lawsuits while preserving the 
     ability of individuals and businesses that have suffered real 
     injury to obtain complete relief.

     SEC. 3. DEFINITIONS.

       In this Act:
       (1) Y2K action.--The term ``Y2K action''--
       (A) means a civil action commenced in any Federal or State 
     court, or an agency board of contract appeal proceeding, in 
     which the plaintiff's alleged harm or injury resulted 
     directly or indirectly from an actual or potential Y2K 
     failure, or a claim or defense is related directly or 
     indirectly to an actual or potential Y2K failure;
       (B) includes a civil action commenced in any Federal or 
     State court by a governmental entity when acting in a 
     commercial or contracting capacity; but
       (C) does not include an action brought by a governmental 
     entity acting in a regulatory, supervisory, or enforcement 
     capacity.
       (2) Y2K failure.--The term ``Y2K failure'' means failure by 
     any device or system (including any computer system and any 
     microchip or integrated circuit embedded in another device or 
     product), or any software, firmware, or other set or 
     collection of processing instructions to process, to 
     calculate, to compare, to sequence, to display, to store,

[[Page 7516]]

     to transmit, or to receive year-2000 date-related data, 
     including failures--
       (A) to deal with or account for transitions or comparisons 
     from, into, and between the years 1999 and 2000 accurately;
       (B) to recognize or accurately to process any specific date 
     in 1999, 2000, or 2001; or
       (C) accurately to account for the year 2000's status as a 
     leap year, including recognition and processing of the 
     correct date on February 29, 2000.
       (3) Government entity.--The term ``government entity'' 
     means an agency, instrumentality, or other entity of Federal, 
     State, or local government (including multijurisdictional 
     agencies, instrumentalities, and entities).
       (4) Material defect.--The term ``material defect'' means a 
     defect in any item, whether tangible or intangible, or in the 
     provision of a service, that substantially prevents the item 
     or service from operating or functioning as designed or 
     according to its specifications. The term ``material defect'' 
     does not include a defect that--
       (A) has an insignificant or de minimis effect on the 
     operation or functioning of an item or computer program;
       (B) affects only a component of an item or program that, as 
     a whole, substantially operates or functions as designed; or
       (C) has an insignificant or de minimis effect on the 
     efficacy of the service provided.
       (5) Personal injury.--The term ``personal injury'' means 
     physical injury to a natural person, including--
       (A) death as a result of a physical injury; and
       (B) mental suffering, emotional distress, or similar 
     injuries suffered by that person in connection with a 
     physical injury.
       (6) State.--The term ``State'' means any State of the 
     United States, the District of Columbia, Commonwealth of 
     Puerto Rico, the Northern Mariana Islands, the United States 
     Virgin Islands, Guam, American Samoa, and any other territory 
     or possession of the United States, and any political 
     subdivision thereof.
       (7) Contract.--The term ``contract'' means a contract, 
     tariff, license, or warranty.
       (8) Alternative dispute resolution.--The term ``alternative 
     dispute resolution'' means any process or proceeding, other 
     than adjudication by a court or in an administrative 
     proceeding, to assist in the resolution of issues in 
     controversy, through processes such as early neutral 
     evaluation, mediation, minitrial, and arbitration.

     SEC. 4. APPLICATION OF ACT.

       (a) General Rule.--This Act applies to any Y2K action 
     brought in a State or Federal court after February 22, 1999, 
     for a Y2K failure occurring before January 1, 2003, including 
     any appeal, remand, stay, or other judicial, administrative, 
     or alternative dispute resolution proceeding in such an 
     action.
       (b) No New Cause of Action Created.--Nothing in this Act 
     creates a new cause of action, and, except as otherwise 
     explicitly provided in this Act, nothing in this Act expands 
     any liability otherwise imposed or limits any defense 
     otherwise available under Federal or State law.
       (c) Claims for Personal Injury or Wrongful Death 
     Excluded.--This Act does not apply to a claim for personal 
     injury or for wrongful death.
       (d) Contract Preservation.--
       (1) In general.--Subject to paragraph (2), in any Y2K 
     action any written contractual term, including a limitation 
     or an exclusion of liability, or a disclaimer of warranty, 
     shall be strictly enforced unless the enforcement of that 
     term would manifestly and directly contravene applicable 
     State law embodied in any statute in effect on January 1, 
     1999, specifically addressing that term.
       (2) Interpretation of contract.--In any Y2K action in which 
     a contract to which paragraph (1) applies is silent as to a 
     particular issue, the interpretation of the contract as to 
     that issue shall be determined by applicable law in effect at 
     the time the contract was executed.
       (e) Preemption of State Law.--This Act supersedes State law 
     to the extent that it establishes a rule of law applicable to 
     a Y2K action that is inconsistent with State law, but nothing 
     in this Act implicates, alters, or diminishes the ability of 
     a State to defend itself against any claim on the basis of 
     sovereign immunity.

     SEC. 5. PUNITIVE DAMAGES LIMITATIONS.

       (a) In General.--In any Y2K action in which punitive 
     damages are permitted by applicable law, the defendant shall 
     not be liable for punitive damages unless the plaintiff 
     proves by clear and convincing evidence that the applicable 
     standard for awarding damages has been met.
       (b) Caps on Punitive Damages.--
       (1) In general.--Subject to the evidentiary standard 
     established by subsection (a), punitive damages permitted 
     under applicable law against a defendant in such a Y2K action 
     may not exceed the larger of--
       (A) 3 times the amount awarded for compensatory damages; or
       (B) $250,000.
       (2) Special rule.--In the case of a defendant--
       (A) who--
       (i) is sued in his or her capacity as an individual; and
       (ii) whose net worth does not exceed $500,000; or
       (B) that is an unincorporated business, a partnership, 
     corporation, association, unit of local government, or 
     organization with fewer than 25 full-time employees,

     paragraph (1) shall be applied by substituting ``smaller'' 
     for ``larger''.
       (3) No cap if injury specifically intended.--Neither 
     paragraph (1) nor paragraph (2) applies if the plaintiff 
     establishes by clear and convincing evidence that the 
     defendant acted with specific intent to injure the plaintiff.
       (c) Government Entities.--Punitive damages in a Y2K action 
     may not be awarded against a government entity.

     SEC. 6. PROPORTIONATE LIABILITY.

       (a) In General.--Except as provided in subsections (b) and 
     (c), a person against whom a final judgment is entered in a 
     Y2K action shall be liable solely for the portion of the 
     judgment that corresponds to the relative and proportional 
     responsibility of that person. In determining the percentage 
     of responsibility of any defendant, the trier of fact shall 
     determine that percentage as a percentage of the total fault 
     of all persons, including the plaintiff, who caused or 
     contributed to the total loss incurred by the plaintiff.
       (b) Proportionate Liability.--
       (1) Determination of responsibility.--In any Y2K action, 
     the court shall instruct the jury to answer special 
     interrogatories, or, if there is no jury, the court shall 
     make findings with respect to each defendant, including 
     defendants who have entered into settlements with the 
     plaintiff or plaintiffs, concerning--
       (A) the percentage of responsibility, if any, of each 
     defendant, measured as a percentage of the total fault of all 
     persons who caused or contributed to the loss incurred by the 
     plaintiff; and
       (B) if alleged by the plaintiff, whether the defendant--
       (i) acted with specific intent to injure the plaintiff; or
       (ii) knowingly committed fraud.
       (2) Contents of special interrogatories or findings.--The 
     responses to interrogatories or findings under paragraph (1) 
     shall specify the total amount of damages that the plaintiff 
     is entitled to recover and the percentage of responsibility 
     of each defendant found to have caused or contributed to the 
     loss incurred by the plaintiff.
       (3) Factors for consideration.--In determining the 
     percentage of responsibility under this subsection, the trier 
     of fact shall consider--
       (A) the nature of the conduct of each person found to have 
     caused or contributed to the loss incurred by the plaintiff; 
     and
       (B) the nature and extent of the causal relationship 
     between the conduct of each defendant and the damages 
     incurred by the plaintiff.
       (c) Joint Liability for Specific Intent or Fraud.--
       (1) In general.--Notwithstanding subsection (a), the 
     liability of a defendant in a Y2K action is joint and several 
     if the trier of fact specifically determines that the 
     defendant--
       (A) acted with specific intent to injure the plaintiff; or
       (B) knowingly committed fraud.
       (2) Fraud; Recklessness.--
       (A) Knowing commission of fraud described.--For purposes of 
     subsection (b)(1)(B)(ii) and paragraph (1)(B) of this 
     subsection, a defendent knowingly committed fraud if the 
     defendant--
       (i) made an untrue statement of a material fact, with 
     actual knowledge that the statement was false;
       (ii) omitted a fact necessary to make the statement not be 
     misleading, with actual knowledge that, as a result of the 
     omission, the statement was false; and
       (iii) knew that the plaintiff was reasonably likely to rely 
     on the false statement.
       (B) Recklessness.--For purposes of subsection (b)(1)(B) and 
     paragraph (1) of this subsection, reckless conduct by the 
     defendant does not constitute either a specific intent to 
     injure, or the knowing commission of fraud, by the defendent.
       (3) Right to contribution not affected.--Nothing in this 
     section affects the right, under any other law, of a 
     defendant to contribution with respect to another defendant 
     found under subsection (b)(1)(B), or determined under 
     paragraph (1)(B) of this subsection, to have acted with 
     specific intent to injure the plaintiff or to have knowingly 
     committed fraud.
       (d) Special Rules.--
       (1) Uncollectible share.--
       (A) In general.--Notwithstanding subsection (a), if, upon 
     motion not later than 6 months after a final judgment is 
     entered in any Y2K action, the court determines that all or 
     part of the share of the judgment against a defendant for 
     compensatory damages is not collectible against that 
     defendant, then each other defendant in the action is liable 
     for the uncollectible share as follows:
       (i) Percentage of net worth.--The other defendants are 
     jointly and severally liable for the uncollectible share if 
     the plaintiff establishes that--
       (I) the plaintiff is an individual whose recoverable 
     damages under the final judgment

[[Page 7517]]

     are equal to more than 10 percent of the net worth of the 
     plaintiff; and
       (II) the net worth of the plaintiff is less than $200,000.
       (ii) Other plaintiffs.--For a plaintiff not described in 
     clause (i), each of the other defendants is liable for the 
     uncollectible share in proportion to the percentage of 
     responsibility of that defendant, except that the total 
     liability of a defendant under this clause may not exceed 50 
     percent of the proportionate share of that defendant, as 
     determined under subsection (b)(2).
       (B) Overall limit.--The total payments required under 
     subparagraph (A) from all defendants may not exceed the 
     amount of the uncollectible share.
       (C) Subject to contribution.--A defendant against whom 
     judgment is not collectible is subject to contribution and to 
     any continuing liability to the plaintiff on the judgment.
       (2) Special right of contribution.--To the extent that a 
     defendant is required to make an additional payment under 
     paragraph (1), that defendant may recover contribution--
       (A) from the defendant originally liable to make the 
     payment;
       (B) from any other defendant that is jointly and severally 
     liable;
       (C) from any other defendant held proportionately liable 
     who is liable to make the same payment and has paid less than 
     that other defendant's proportionate share of that payment; 
     or
       (D) from any other person responsible for the conduct 
     giving rise to the payment that would have been liable to 
     make the same payment.
       (3) Nondisclosure to jury.--The standard for allocation of 
     damages under subsection (a) and subsection (b)(1), and the 
     procedure for reallocation of uncollectible shares under 
     paragraph (1) of this subsection, shall not be disclosed to 
     members of the jury.
       (e) Settlement Discharge.--
       (1) In general.--A defendant who settles a Y2K action at 
     any time before final verdict or judgment shall be discharged 
     from all claims for contribution brought by other persons. 
     Upon entry of the settlement by the court, the court shall 
     enter a bar order constituting the final discharge of all 
     obligations to the plaintiff of the settling defendant 
     arising out of the action. The order shall bar all future 
     claims for contribution arising out of the action--
       (A) by any person against the settling defendant; and
       (B) by the settling defendant against any person other than 
     a person whose liability has been extinguished by the 
     settlement of the settling defendant.
       (2) Reduction.--If a defendant enters into a settlement 
     with the plaintiff before the final verdict or judgment, the 
     verdict or judgment shall be reduced by the greater of--
       (A) an amount that corresponds to the percentage of 
     responsibility of that defendant; or
       (B) the amount paid to the plaintiff by that defendant.
       (f) General Right of Contribution.--
       (1) In general.--A defendant who is jointly and severally 
     liable for damages in any Y2K action may recover contribution 
     from any other person who, if joined in the original action, 
     would have been liable for the same damages. A claim for 
     contribution shall be determined based on the percentage of 
     responsibility of the claimant and of each person against 
     whom a claim for contribution is made.
       (2) Statute of limitations for contribution.--An action for 
     contribution in connection with a Y2K action shall be brought 
     not later than 6 months after the entry of a final, 
     nonappealable judgment in the Y2K action, except than an 
     action for contribution brought by a defendant who was 
     required to make an additional payment under subsection 
     (d)(1) may be brought not later than 6 months after the date 
     on which such payment was made.
       (g) More Protective State Law Not Preempted.--Nothing in 
     this section pre-empts or supersedes any provision of State 
     statutory law that--
       (1) limits the liability of a defendant in a Y2K action to 
     a lesser amount than the amount determined under this 
     section; or
       (2) otherwise affords a greater degree of protection from 
     joint or several liability than is afforded by this section.

     SEC. 7. PRE-LITIGATION NOTICE.

       (a) In General.--Before commencing a Y2K action, except an 
     action that seeks only injunctive relief, a prospective 
     plaintiff with a Y2K claim shall send a written notice by 
     certified mail to each prospective defendant in that action. 
     The notice shall provide specific and detailed information 
     about--
       (1) the manifestations of any material defect alleged to 
     have caused harm or loss;
       (2) the harm or loss allegedly suffered by the prospective 
     plaintiff;
       (3) how the prospective plaintiff would like the 
     prospective defendant to remedy the problem;
       (4) the basis upon which the prospective plaintiff seeks 
     that remedy; and
       (5) the name, title, address, and telephone number of any 
     individual who has authority to negotiate a resolution of the 
     dispute on behalf of the prospective plaintiff.
       (b) Person to Whom Notice To Be Sent.--The notice required 
     by subsection (a) shall be sent--
       (1) to the registered agent of the prospective defendant 
     for service of legal process;
       (2) if the prospective defendant does not have a registered 
     agent, then to the chief executive officer of a corporation, 
     the managing partner of a partnership, the proprietor of a 
     sole proprietorship, or to a similarly-situated person for 
     any other enterprise; or
       (3) if the prospective defendant has designated a person to 
     receive pre-litigation notices on a Year 2000 Internet 
     Website (as defined in section 3(7) of the Year 2000 
     Information and Readiness Disclosure Act), to the designated 
     person, if the prospective plaintiff has reasonable access to 
     the Internet.
       (c) Response to Notice.--
       (1) In general.--Within 30 days after receipt of the notice 
     specified in subsection (a), each prospective defendant shall 
     send by certified mail with return receipt requested to each 
     prospective plaintiff a written statement acknowledging 
     receipt of the notice, and describing the actions it has 
     taken or will take to address the problem identified by the 
     prospective plaintiff.
       (2) Willingness to engage in adr.--The Written statement 
     shall state whether the prospective defendant is willing to 
     engage in alternative dispute resolution.
       (3) Inadmissibility.--A written statement required by this 
     paragraph is not admissible in evidence, under Rule 408 of 
     the Federal Rules of Evidence or any analogous rule of 
     evidence in any State, in any proceeding to prove liability 
     for, or the invalidity of, a claim or its amount, or 
     otherwise as evidence of conduct or statements made in 
     compromise negotiations.
       (4) Presumptive time of receipt.--For purposes of paragraph 
     (1), a notice under subsection (a) is presumed to be received 
     7 days after it was sent.
       (d) Failure to Respond.--If a prospective defendant--
       (1) fails to respond to a notice provided pursuant to 
     subsection (a) within the 30 days specified in subsection 
     (c)(1); or
       (2) does not describe the action, if any, the prospective 
     defendant has taken, or will take, to address the problem 
     identified by the prospective plaintiff,

     the prospective plaintiff may immediately commence at legal 
     action against that prospective defendant.
       (e) Remediation Period.--
       (1) In general.--If the prospective defendant responds and 
     proposes remedial action it will take, of offers to engage in 
     alternative dispute resolution, then the prospective 
     plaintiff shall allow the prospective defendant an additional 
     60 days from the end of the 30-day notice period to complete 
     the proposed remedial action before commencing a legal action 
     against that prospective defendant.
       (2) Extension by agreement.--The prospective plaintiff and 
     prospective defendant may change the length of the 60-day 
     remediation period by written agreement.
       (3) Multiple extensions not allowed.--Except as provided in 
     paragraph (2), a defendant in a Y2K action is entitled to no 
     more than one 30-day period and one 60-day remediation period 
     under paragraph (1).
       (4) Statutes of limitation, etc., tolled.--Any applicable 
     statute of limitations or doctrine of laches in a Y2K action 
     to which paragraph (1) applies shall be tolled during the 
     notice and remediation period under that paragraph.
       (f) Failure to Provide Notice.--If a defendant determines 
     that a plaintiff has filed a Y2K action without providing the 
     notice specified in subsection (a) or without awaiting the 
     expiration of the appropriate waiting period specified in 
     subsection (c), the defendant may treat the plaintiff's 
     complaint as such a notice by so informing the court and the 
     plaintiff. If any defendant elects to treat the complaint as 
     such a notice--
       (1) the court shall stay all discovery and all other 
     proceedings in the action for the appropriate period after 
     filing of the complaint; and
       (2) the time for filing answers and all other pleadings 
     shall be tolled during the appropriate period.
       (g) Effect of Contractual or Statutory Waiting Periods.--In 
     cases in which a contract, or a statute enacted before 
     January 1, 1999, requires notice of non-performance and 
     provides for a period of delay prior to the initiation of 
     suit for breach or repudiation of contract, the period of 
     delay provided by contract or the statute is controlling over 
     the waiting period specified in subsections (c) and (d).
       (h) State Law Controls Alternative Methods.--Nothing in 
     this section supersedes or otherwise preempts any State law 
     or rule of civil procedure with respect to the use of 
     alternative dispute resolution for Y2K actions.
       (i) Provisional Remedies Unaffected.--Nothing in this 
     section interferes with the right of a litigant to 
     provisional remedies otherwise available under Rule 65 of the 
     Federal Rules of Civil Procedure or any State rule of civil 
     procedure providing extraordinary or provisional remedies in 
     any civil action in which the underlying complaint seeks both 
     injunctive and monetary relief.
       (j) Special Rule for Class Actions.--For the purpose of 
     applying this section to a Y2K

[[Page 7518]]

     action that is maintained as a class action in Federal or 
     State court, the requirements of the preceding subsections of 
     this section apply only to named plaintiffs in the class 
     action.

     SEC. 8. PLEADING REQUIREMENTS.

       (a) Application With Rules of Civil Procedure.--This 
     section applies exclusively to Y2K actions and, except to the 
     extent that this section requires additional information to 
     be contained in or attached to pleadings, nothing in this 
     section is intended to amend or otherwise supersede 
     applicable rules of Federal or State civil procedure.
       (b) Nature and Amount of Damages.--In all Y2K actions in 
     which damages are requested, there shall be filed with the 
     complaint a statement of specific information as to the 
     nature and amount of each element of damages and the factual 
     basis for the damages calculation.
       (c) Material Defects.--In any Y2K action in which the 
     plaintiff alleges that there is a material defect in a 
     product or service, there shall be filed with the complaint a 
     statement of specific information regarding the 
     manifestations of the material defects and the facts 
     supporting a conclusion that the defects are material.
       (d) Required State of Mind.--In any Y2K action in which a 
     claim is asserted on which the plaintiff may prevail only on 
     proof that the defendant acted with a particular state of 
     mind, there shall be filed with the complaint, with respect 
     to each element of that claim, a statement of the facts 
     giving rise to a strong inference that the defendant acted 
     with the required state of mind.

     SEC. 9. DUTY TO MITIGATE.

       Damages awarded in any Y2K action shall exclude 
     compensation for damages the plaintiff could reasonably have 
     avoided in light of any disclosure or other information of 
     which the plaintiff was, or reasonably should have been, 
     aware, including information made available by the defendant 
     to purchasers or users of the defendant's product or services 
     concerning means of remedying or avoiding the Y2K failure.

     SEC. 10. APPLICATION OF EXISTING IMPOSSIBILITY OR COMMERCIAL 
                   IMPRACTICABILITY DOCTRINES.

       In any Y2K action for breach or repudiation of contract, 
     the applicability of the doctrines of impossibility and 
     commercial impracticability shall be determined by the law in 
     existence on January 1, 1999. Nothing in this Act shall be 
     construed as limiting or impairing a party's right to assert 
     defenses based upon such doctrines.

     SEC. 11. DAMAGES LIMITATION BY CONTRACT.

       In any Y2K action for breach or repudiation of contract, no 
     party may claim, nor be awarded, any category of damages 
     unless such damages are allowed--
       (1) by the express terms of the contract; or
       (2) if the contract is silent on such damages, by operation 
     of State law at the time the contract was effective or by 
     operation of Federal law.

     SEC. 12. DAMAGES IN TORT CLAIMS.

       (a) In General.--A party to a Y2K action making a tort 
     claim may not recover damages for economic loss unless--
       (1) the recovery of such losses is provided for in a 
     contract to which the party seeking to recover such losses is 
     a party; or
       (2) such losses result directly from damage to tangible 
     personal or real property caused by the Y2K failure (other 
     than damage to property that is the subject of the contract 
     between the parties to the Y2K action or, in the event there 
     is no contract between the parties, other than damage caused 
     only to the property that experienced the Y2K failure),

     and such damages are permitted under applicable State law.
       (b) Economic Loss.--For purposes of this section only, and 
     except as otherwise specifically provided in a valid and 
     enforceable written contract between the plaintiff and the 
     defendant in a Y2K action, the term ``economic loss''--
       (1) means amounts awarded to compensate an injured party 
     for any loss other than losses described in subsection 
     (a)(2); and
       (2) includes amounts awarded for damages such as--
       (A) lost profits or sales;
       (B) business interruption;
       (C) losses indirectly suffered as a result of the 
     defendant's wrongful act or omission;
       (D) losses that arise because of the claims of third 
     parties;
       (E) losses that must be plead as special damages; and
       (F) consequential damages (as defined in the Uniform 
     Commercial Code or analogous State commercial law).
       (c) Certain Actions Excluded.--This section does not 
     affect, abrogate, amend, or alter any patent, copyright, 
     trade-secret, trademark, or service-mark action, or any claim 
     for defamation or invasion of privacy under Federal or State 
     law.
       (d) Certain Other Actions.--A person liable for damages, 
     whether by settlement or judgment, in a civil action to which 
     this Act does not apply because of section 4(c), whose 
     liability, in whole or in part, is the result of a Y2K 
     failure may, notwithstanding any other provision of this Act, 
     pursue any remedy otherwise available under Federal or State 
     law against the person responsible for that Y2K failure to 
     the extent of recovering the amount of those damages.

     SEC. 13. STATE OF MIND; BYSTANDER LIABILITY; CONTROL.

       (a) Defendant's State of Mind.--In a Y2K action other than 
     a claim for breach of repudiation of contract, and in which 
     the defendant's actual or constructive awareness of an actual 
     or potential Y2K failure is an element of the claim, the 
     defendant is not liable unless the plaintiff establishes that 
     elements of the claim by clear and convincing evidence.
       (b) Limitation on Bystander Liability for Y2K Failures.--
       (1) In general.--With respect to any Y2K action for money 
     damages in which--
       (A) the defendant is not the manufacturer, seller, or 
     distributor of a product, or the provider of a service, that 
     suffers or causes the Y2K failure at issue;
       (B) the plaintiff is not in substantial privity with the 
     defendant; and
       (C) the defendant's actual or constructive awareness of an 
     actual or potential Y2K failure is an element of the claim 
     under applicable law,

     the defendant shall not be liable unless the plaintiff, in 
     addition to establishing all other requisite elements of the 
     claim, proves by clear and convincing evidence that the 
     defendant actually knew, or recklessly disregarded a known 
     and substantial risk, that such failure would occur.
       (2) Substantial privity.--For purposes of paragraph (1)(B), 
     a plaintiff and a defendant are in substantial privity when, 
     in a Y2K action arising out of the performance of 
     professional services, the plaintiff and the defendant either 
     have contractual relations with one another or the plaintiff 
     is a person who, prior to the defendant's performance of such 
     services, was specifically identified to and acknowledged by 
     the defendant as a person for whose special benefit the 
     services were being performed.
       (3) Certain claims excluded.--For purposes of paragraph 
     (1)(C), claims in which the defendant's actual or 
     constructive awareness of an actual or potential Y2K failure 
     is an element of the claim under applicable law do not 
     include claims for negligence but do include claims such as 
     fraud, constructive fraud, breach of fiduciary duty, 
     negligent misrepresentation, and interference with contract 
     or economic advantage.
       (c) Control Not Determinative of Liability.--The fact that 
     a Y2K failure occurred in an entity, facility, system, 
     product, or component that was sold, leased, rented, or 
     otherwise within the control of the party against whom a 
     claim is asserted in a Y2K action shall not constitute the 
     sole basis for recovery of damages in that action. A claim in 
     a Y2K action for breach or repudiation of contract for such a 
     failure is governed by the terms of the contract.

     SEC. 14. LIABILITY OF OFFICERS, DIRECTORS, AND EMPLOYEES.

       (a) In General.--A director, officer, trustee, or employee 
     of a business or other organization (including a corporation, 
     unincorporated association, partnership, or non-profit 
     organization) is not personally liable in any Y2K action in 
     that person's capacity as a director, officer, trustee, or 
     employee of the business or organization for more than the 
     greater of--
       (1) $100,000; or
       (2) the amount of pre-tax compensation received by the 
     director, officer, trustee, or employee from the business or 
     organization during the 12 months immediately preceding the 
     act or omission for which liability is imposed.
       (b) Exception.--Subsection (a) does not apply in any Y2K 
     action in which it is found by clear and convincing evidence 
     that the director, officer, trustee, or employee--
       (1) made statements intended to be misleading regarding any 
     actual or potential year 2000 problem; or
       (2) withheld from the public significant information there 
     was a legal duty to disclose regarding any actual or 
     potential year 2000 problem of that business or organization 
     which would likely result in actionable Y2K failure.
       (c) State Law, Charter, or Bylaws.--Nothing in this section 
     supersedes any provision of State law, charter, or a bylaw 
     authorized by State law in existence on January 1, 1999, that 
     establishes lower financial limits on the liability of a 
     director, officer, trustee, or employee of such a business or 
     organization.

     SEC. 15. APPOINTMENT OF SPECIAL MASTERS OR MAGISTRATES FOR 
                   Y2K ACTIONS.

       Any District Court of the United States in which a Y2K 
     action is pending may appoint a special master or a 
     magistrate to hear the matter and to make findings of fact 
     and conclusions of law in accordance with Rule 53 of the 
     Federal Rules of Civil Procedure.

     SEC. 16. Y2K ACTIONS AS CLASS ACTIONS.

       (a) Minimum Injury Requirement.--A Y2K action involving a 
     claim that a product or service is defective may be 
     maintained as a class action in Federal or State court as to 
     that claim only if--
       (1) it satisfies all other prerequisites established by 
     applicable Federal or State law, including applicable rules 
     of civil procedure; and
       (2) the court finds that the defect in a product or service 
     as alleged would be a material defect for the majority of the 
     members of the class.

[[Page 7519]]

       (b) Notification.--In any Y2K action that is maintained as 
     a class action, the court, in addition to any other notice 
     required by applicable Federal or State law, shall direct 
     notice of the action to each member of the class, which shall 
     include--
       (1) a concise and clear description of the nature of the 
     action;
       (2) the jurisdiction where the case is pending; and
       (3) the fee arrangements with class counsel, including the 
     hourly fee being charged, or, if it is a contingency fee, the 
     percentage of the final award which will be paid, including 
     as estimate of the total amount that would be paid if the 
     requested damages were to be granted.
       (c) Forum for Y2K Class Actions.--
       (1) Jurisdiction.--Except as provided in paragraph (2), a 
     Y2K action may be brought as a class action in a United 
     States District Court or removed to a United States District 
     Court if the amount in controversy is greater than the sum or 
     value of $1,000,000 (exclusive of interest and costs), 
     computed on the basis of all claims to be determined in the 
     action.
       (2) Exception.--A Y2K action may not be brought or removed 
     as a class action under this section if--
       (A) a substantial majority of the members of the proposed 
     plaintiff class are citizens of a single State;
       (B) the primary defendants are citizens of that State; and
       (C) the claims asserted will be governed primarily by the 
     law of that State, or

     the primary defendants are States, State officials, or other 
     governmental entities against whom the United States District 
     Court may be foreclosed from ordering relief.
       (D) This section shall become effective two days after the 
     date of enactment.
                                 ______
                                 

                         LOTT AMENDMENT NO. 269

  Mr. LOTT proposed an amendment to amendment No. 268 proposed by him 
to the bill, S. 96, supra; as follows:

       Strike all after the word ``section'' and insert the 
     following:

     SECTION 1. SHORT TITLE; TABLE OF SECTIONS.

       (a) Short Title.--This Act may be cited as the ``Y2K Act''.
       (b) Table of Sections.--The table of sections for this Act 
     is as follows:

Sec. 1. Short title; table of sections.
Sec. 2. Findings and purposes.
Sec. 3. Definitions.
Sec. 4. Application of Act.
Sec. 5. Punitive damages limitations.
Sec. 6. Proportionate liability.
Sec. 7. Pre-litigation notice.
Sec. 8. Pleading requirements.
Sec. 9. Duty to mitigate.
Sec. 10. Application of existing impossibility or commercial 
              impracticability doctrines.
Sec. 11. Damages limitation by contract.
Sec. 12. Damages in tort claims.
Sec. 13. State of mind; bystander liability; control.
Sec. 14. Liability of officers, directors, and employees.
Sec. 15. Appointment of special masters or magistrates for Y2K actions.
Sec. 16. Y2K actions as class actions.

     SEC. 2. FINDINGS AND PURPOSES.

       (a) Findings.--The Congress finds that:
       (1)(A) Many information technology systems, devices, and 
     programs are not capable of recognizing certain dates in 1999 
     and after December 31, 1999, and will read dates in the year 
     2000 and thereafter as if those dates represent the year 1900 
     or thereafter or will fail to process dates after December 
     31, 1999.
       (B) If not corrected, the problem described in subparagraph 
     (A) and resulting failures could incapacitate systems that 
     are essential to the functioning of markets, commerce, 
     consumer products, utilities, Government, and safety and 
     defense systems, in the United States and throughout the 
     world.
       (2) It is in the national interest that producers and users 
     of technology products concentrate their attention and 
     resources in the time remaining before January 1, 2000, on 
     assessing, fixing, testing, and developing contingency plans 
     to address any and all outstanding year 2000 computer date-
     change problems, so as to minimize possible disruptions 
     associated with computer failures.
       (3)(A) Because year 2000 computer date-change problems may 
     affect virtually all businesses and other users of technology 
     products to some degree, there is a substantial likelihood 
     that actual or potential year 2000 failures will prompt a 
     significant volume of litigation, much of it insubstantial.
       (B) The litigation described in subparagraph (A) would have 
     a range of undesirable effects, including the following:
       (i) It would threaten to waste technical and financial 
     resources that are better devoted to curing year 2000 
     computer date-change problems and ensuring that systems 
     remain or become operational.
       (ii) It could threaten the network of valued and trusted 
     business and customer relationships that are important to the 
     effective functioning of the national economy.
       (iii) It would strain the Nation's legal system, causing 
     particular problems for the small businesses and individuals 
     who already find that system inaccessible because of its 
     complexity and expense.
       (iv) The delays, expense, uncertainties, loss of control, 
     adverse publicity, and animosities that frequently accompany 
     litigation of business disputes could exacerbate the 
     difficulties associated with the date change and work against 
     the successful resolution of those difficulties.
       (4) It is appropriate for the Congress to enact legislation 
     to assure that Y2K problems do not unnecessarily disrupt 
     interstate commerce or create unnecessary caseloads in 
     Federal courts and to provide initiatives to help businesses 
     prepare and be in a position to withstand the potentially 
     devastating economic impact of Y2K.
       (5) Resorting to the legal system for resolution of Y2K 
     problems is not feasible for many businesses and individuals 
     who already find the legal system inaccessible, particularly 
     small businesses and individuals who already find the legal 
     system inaccessible, because of its complexity and expense.
       (6) The delays, expense, uncertainties, loss of control, 
     adverse publicity, and animosities that frequently accompany 
     litigation of business disputes can only exacerbate the 
     difficulties associated with Y2K date change, and work 
     against the successful resolution of those difficulties.
       (7) Concern about the potential for liability--in 
     particular, concern about the substantial litigation expense 
     associated with defending against even the most insubstantial 
     lawsuits--is prompting many persons and businesses with 
     technical expertise to avoid projects aimed at curing year 
     2000 computer date-change problems.
       (8) A proliferation of frivolous Y2K lawsuits by 
     opportunistic parties may further limit access to courts by 
     straining the resources of the legal system and depriving 
     deserving parties of their legitimate rights to relief.
       (9) Congress encourages businesses to approach their Y2K 
     disputes responsibly, and to avoid unnecessary, time-
     consuming and costly litigation about Y2K failures, 
     particularly those that are not material. Congress supports 
     good faith negotiations between parties when there is a 
     dispute over a Y2K problem, and, if necessary, urges the 
     parties to enter into voluntary, non-binding mediation rather 
     than litigation.
       (b) Purposes.--Based upon the power of the Congress under 
     Article I, Section 8, Clause 3 of the Constitution of the 
     United States, the purpose of this Act are--
       (1) to establish uniform legal standards that give all 
     businesses and users of technology products reasonable 
     incentives to solve Y2K computer date-change problems before 
     they develop;
       (2) to encourage continued Y2K remediation and testing 
     efforts by providers, suppliers, customers, and other 
     contracting partners;
       (3) to encourage private and public parties alike to 
     resolve Y2K disputes by alternative dispute mechanisms in 
     order to avoid costly and time-consuming litigation, to 
     initiate those mechanisms as early as possible, and to 
     encourage the prompt identification and correction of Y2K 
     problems; and
       (4) to lessen the burdens on interstate commerce by 
     discouraging insubstantial lawsuits while preserving the 
     ability of individuals and businesses that have suffered real 
     injury to obtain complete relief.

     SEC. 3. DEFINITIONS.

       In this Act:
       (1) Y2K action.--The term ``Y2K action''--
       (A) means a civil action commenced in any Federal or State 
     court, or an agency board of contract appeal proceeding, in 
     which the plaintiff's alleged harm or injury resulted 
     directly or indirectly from an actual or potential Y2K 
     failure, or a claim or defense is related directly or 
     indirectly to an actual or potential Y2K failure;
       (B) includes a civil action commenced in any Federal or 
     State court by a governmental entity when acting in a 
     commercial or contracting capacity; but
       (C) does not include an action brought by a governmental 
     entity acting in a regulatory, supervisory, or enforcement 
     capacity.
       (2) Y2K failure.--The term ``Y2K failure'' means failure by 
     any device or system (including any computer system and any 
     microchip or integrated circuit embedded in another device or 
     product), or any software, firmware, or other set or 
     collection of processing instructions to process, to 
     calculate, to compare, to sequence, to display, to store, to 
     transmit, or to receive year-2000 date-related data, 
     including failures--
       (A) to deal with or account for transitions or comparisons 
     from, into, and between the years 1999 and 2000 accurately;
       (B) to recognize or accurately to process any specific date 
     in 1999, 2000, or 2001; or
       (C) accurately to account for the year 2000's status as a 
     leap year, including recognition and processing of the 
     correct date on February 29, 2000.
       (3) Government entity.--The term ``government entity'' 
     means an agency, instrumentality, or other entity of Federal, 
     State, or local government (including multijurisdictional 
     agencies, instrumentalities, and entities).
       (4) Material defect.--The term ``material defect'' means a 
     defect in any item, whether tangible or intangible, or in the 
     provision of a service, that substantially prevents the

[[Page 7520]]

     item or service from operating or functioning as designed or 
     according to its specifications. The term ``material defect'' 
     does not include a defect that--
       (A) has an insignificant or de minimis effect on the 
     operation or functioning of an item or computer program;
       (B) affects only a component of an item or program that, as 
     a whole, substantially operates or functions as designed; or
       (C) has an insignificant or de minimis effect on the 
     efficacy of the service provided.
       (5) Personal injury.--The term ``personal injury'' means 
     physical injury to a natural person, including--
       (A) death as a result of a physical injury; and
       (B) mental suffering, emotional distress, or similar 
     injuries suffered by that person in connection with a 
     physical injury.
       (6) State.--The term ``State'' means any State of the 
     United States, the District of Columbia, Commonwealth of 
     Puerto Rico, the Northern Mariana Islands, the United States 
     Virgin Islands, Guam, American Samoa, and any other territory 
     or possession of the United States, and any political 
     subdivision thereof.
       (7) Contract.--The term ``contract'' means a contract, 
     tariff, license, or warranty.
       (8) Alternative dispute resolution.--The term ``alternative 
     dispute resolution'' means any process or proceeding, other 
     than adjudication by a court or in an administrative 
     proceeding, to assist in the resolution of issues in 
     controversy, through processes such as early neutral 
     evaluation, mediation, minitrial, and arbitration.

     SEC. 4. APPLICATION OF ACT.

       (a) General Rule.--This Act applies to any Y2K action 
     brought in a State or Federal court after February 22, 1999, 
     for a Y2K failure occurring before January 1, 2003, including 
     any appeal, remand, stay, or other judicial, administrative, 
     or alternative dispute resolution proceeding in such an 
     action.
       (b) No New Cause of Action Created.--Nothing in this Act 
     creates a new cause of action, and, except as otherwise 
     explicitly provided in this Act, nothing in this Act expands 
     any liability otherwise imposed or limits any defense 
     otherwise available under Federal or State law.
       (c) Claims for Personal Injury or Wrongful Death 
     Excluded.--This Act does not apply to a claim for personal 
     injury or for wrongful death.
       (d) Contract Preservation.--
       (1) In general.--Subject to paragraph (2), in any Y2K 
     action any written contractual term, including a limitation 
     or an exclusion of liability, or a disclaimer of warranty, 
     shall be strictly enforced unless the enforcement of that 
     term would manifestly and directly contravene applicable 
     State law embodied in any statute in effect on January 1, 
     1999, specifically addressing that term.
       (2) Interpretation of contract.--In any Y2K action in which 
     a contract to which paragraph (1) applies is silent as to a 
     particular issue, the interpretation of the contract as to 
     that issue shall be determined by applicable law in effect at 
     the time the contract was executed.
       (e) Preemption of State Law.--This Act supersedes State law 
     to the extent that it establishes a rule of law applicable to 
     a Y2K action that is inconsistent with State law, but nothing 
     in this Act implicates, alters, or diminishes the ability of 
     a State to defend itself against any claim on the basis of 
     sovereign immunity.

     SEC. 5. PUNITIVE DAMAGES LIMITATIONS.

       (a) In General.--In any Y2K action in which punitive 
     damages are permitted by applicable law, the defendant shall 
     not be liable for punitive damages unless the plaintiff 
     proves by clear and convincing evidence that the applicable 
     standard for awarding damages has been met.
       (b) Caps on Punitive Damages.--
       (1) In general.--Subject to the evidentiary standard 
     established by subsection (a), punitive damages permitted 
     under applicable law against a defendant in such a Y2K action 
     may not exceed the larger of--
       (A) 3 times the amount awarded for compensatory damages; or
       (B) $250,000.
       (2) Special rule.--In the case of a defendant--
       (A) who--
       (i) is sued in his or her capacity as an individual; and
       (ii) whose net worth does not exceed $500,000; or
       (B) that is an unincorporated business, a partnership, 
     corporation, association, unit of local government, or 
     organization with fewer than 25 full-time employees,

     paragraph (1) shall be applied by substituting ``smaller'' 
     for ``larger''.
       (3) No cap if injury specifically intended.--Neither 
     paragraph (1) nor paragraph (2) applies if the plaintiff 
     establishes by clear and convincing evidence that the 
     defendant acted with specific intent to injure the plaintiff.
       (c) Government Entities.--Punitive damages in a Y2K action 
     may not be awarded against a government entity.

     SEC. 6. PROPORTIONATE LIABILITY.

       (a) In General.--Except as provided in subsections (b) and 
     (c), a person against whom a final judgment is entered in a 
     Y2K action shall be liable solely for the portion of the 
     judgment that corresponds to the relative and proportional 
     responsibility of that person. In determining the percentage 
     of responsibility of any defendant, the trier of fact shall 
     determine that percentage as a percentage of the total fault 
     of all persons, including the plaintiff, who caused or 
     contributed to the total loss incurred by the plaintiff.
       (b) Proportionate Liability.--
       (1) Determination of responsibility.--In any Y2K action, 
     the court shall instruct the jury to answer special 
     interrogatories, or, if there is no jury, the court shall 
     make findings with respect to each defendant, including 
     defendants who have entered into settlements with the 
     plaintiff or plaintiffs, concerning--
       (A) the percentage of responsibility, if any, of each 
     defendant, measured as a percentage of the total fault of all 
     persons who caused or contributed to the loss incurred by the 
     plaintiff; and
       (B) if alleged by the plaintiff, whether the defendant--
       (i) acted with specific intent to injure the plaintiff; or
       (ii) knowingly committed fraud.
       (2) Contents of special interrogatories or findings.--The 
     responses to interrogatories or findings under paragraph (1) 
     shall specify the total amount of damages that the plaintiff 
     is entitled to recover and the percentage of responsibility 
     of each defendant found to have caused or contributed to the 
     loss incurred by the plaintiff.
       (3) Factors for consideration.--In determining the 
     percentage of responsibility under this subsection, the trier 
     of fact shall consider--
       (A) the nature of the conduct of each person found to have 
     caused or contributed to the loss incurred by the plaintiff; 
     and
       (B) the nature and extent of the causal relationship 
     between the conduct of each defendant and the damages 
     incurred by the plaintiff.
       (c) Joint Liability for Specific Intent or Fraud.--
       (1) In general.--Notwithstanding subsection (a), the 
     liability of a defendant in a Y2K action is joint and several 
     if the trier of fact specifically determines that the 
     defendant--
       (A) acted with specific intent to injure the plaintiff; or
       (B) knowingly committed fraud.
       (2) Fraud; Recklessness.--
       (A) Knowing commission of fraud described.--For purposes of 
     subsection (b)(1)(B)(ii) and paragraph (1)(B) of this 
     subsection, a defendant knowingly committed fraud if the 
     defendant--
       (i) made an untrue statement of a material fact, with 
     actual knowledge that the statement was false;
       (ii) omitted a fact necessary to make the statement not be 
     misleading, with actual knowledge that, as a result of the 
     omission, the statement was false; and
       (iii) knew that the plaintiff was reasonably likely to rely 
     on the false statement.
       (B) Recklessness.--For purposes of subsection (b)(1)(B) and 
     paragraph (1) of this subsection, reckless conduct by the 
     defendant does not constitute either a specific intent to 
     injure, or the knowing commission of fraud, by the defendant.
       (3) Right to contribution not affected.--Nothing in this 
     section affects the right, under any other law, of a 
     defendant to contribution with respect to another defendant 
     found under subsection (b)(1)(B), or determined under 
     paragraph (1)(B) of this subsection, to have acted with 
     specific intent to injure the plaintiff or to have knowingly 
     committed fraud.
       (d) Special Rules.--
       (1) Uncollectible share.--
       (A) In general.--Notwithstanding subsection (a), if, upon 
     motion not later than 6 months after a final judgment is 
     entered in any Y2K action, the court determines that all or 
     part of the share of the judgment against a defendant for 
     compensatory damages is not collectible against that 
     defendant, then each other defendant in the action is liable 
     for the uncollectible share as follows:
       (i) Percentage of net worth.--The other defendants are 
     jointly and severally liable for the uncollectible share if 
     the plaintiff establishes that--
       (I) the plaintiff is an individual whose recoverable 
     damages under the final judgment are equal to more than 10 
     percent of the net worth of the plaintiff; and
       (II) the net worth of the plaintiff is less than $200,000.
       (ii) Other plaintiffs.--For a plaintiff not described in 
     clause (i), each of the other defendants is liable for the 
     uncollectible share in proportion to the percentage of 
     responsibility of that defendant, except that the total 
     liability of a defendant under this clause may not exceed 50 
     percent of the proportionate share of that defendant, as 
     determined under subsection (b)(2).
       (B) Overall limit.--The total payments required under 
     subparagraph (A) from all defendants may not exceed the 
     amount of the uncollectible share.
       (C) Subject to contribution.--A defendant against whom 
     judgment is not collectible is subject to contribution and to 
     any continuing liability to the plaintiff on the judgment.

[[Page 7521]]

       (2) Special right of contribution.--To the extent that a 
     defendant is required to make an additional payment under 
     paragraph (1), that defendant may recover contribution--
       (A) from the defendant originally liable to make the 
     payment;
       (B) from any other defendant that is jointly and severally 
     liable;
       (C) from any other defendant held proportionately liable 
     who is liable to make the same payment and has paid less than 
     that other defendant's proportionate share of that payment; 
     or
       (D) from any other person responsible for the conduct 
     giving rise to the payment that would have been liable to 
     make the same payment.
       (3) Nondisclosure to jury.--The standard for allocation of 
     damages under subsection (a) and subsection (b)(1), and the 
     procedure for reallocation of uncollectible shares under 
     paragraph (1) of this subsection, shall not be disclosed to 
     members of the jury.
       (e) Settlement Discharge.--
       (1) In general.--A defendant who settles a Y2K action at 
     any time before final verdict or judgment shall be discharged 
     from all claims for contribution brought by other persons. 
     Upon entry of the settlement by the court, the court shall 
     enter a bar order constituting the final discharge of all 
     obligations to the plaintiff of the settling defendant 
     arising out of the action. The order shall bar all future 
     claims for contribution arising out of the action--
       (A) by any person against the settling defendant; and
       (B) by the settling defendant against any person other than 
     a person whose liability has been extinguished by the 
     settlement of the settling defendant.
       (2) Reduction.--If a defendant enters into a settlement 
     with the plaintiff before the final verdict or judgment, the 
     verdict or judgment shall be reduced by the greater of--
       (A) an amount that corresponds to the percentage of 
     responsibility of that defendant; or
       (B) the amount paid to the plaintiff by that defendant.
       (f) General Right of Contribution.--
       (1) In general.--A defendant who is jointly and severally 
     liable for damages in any Y2K action may recover contribution 
     from any other person who, if joined in the original action, 
     would have been liable for the same damages. A claim for 
     contribution shall be determined based on the percentage of 
     responsibility of the claimant and of each person against 
     whom a claim for contribution is made.
       (2) Statute of limitations for contribution.--An action for 
     contribution in connection with a Y2K action shall be brought 
     not later than 6 months after the entry of a final, 
     nonappealable judgment in the Y2K action, except than an 
     action for contribution brought by a defendant who was 
     required to make an additional payment under subsection 
     (d)(1) may be brought not later than 6 months after the date 
     on which such payment was made.
       (g) More Protective State Law Not Preempted.--Nothing in 
     this section pre-empts or supersedes any provision of State 
     statutory law that--
       (1) limits the liability of a defendant in a Y2K action to 
     a lesser amount than the amount determined under this 
     section; or
       (2) otherwise affords a greater degree of protection from 
     joint or several liability than is afforded by this section.

     SEC. 7. PRE-LITIGATION NOTICE.

       (a) In General.--Before commencing a Y2K action, except an 
     action that seeks only injunctive relief, a prospective 
     plaintiff with a Y2K claim shall send a written notice by 
     certified mail to each prospective defendant in that action. 
     The notice shall provide specific and detailed information 
     about--
       (1) the manifestations of any material defect alleged to 
     have caused harm or loss;
       (2) the harm or loss allegedly suffered by the prospective 
     plaintiff;
       (3) how the prospective plaintiff would like the 
     prospective defendant to remedy the problem;
       (4) the basis upon which the prospective plaintiff seeks 
     that remedy; and
       (5) the name, title, address, and telephone number of any 
     individual who has authority to negotiate a resolution of the 
     dispute on behalf of the prospective plaintiff.
       (b) Person to Whom Notice To Be Sent.--The notice required 
     by subsection (a) shall be sent--
       (1) to the registered agent of the prospective defendant 
     for service of legal process;
       (2) if the prospective defendant does not have a registered 
     agent, then to the chief executive officer of a corporation, 
     the managing partner of a partnership, the proprietor of a 
     sole proprietorship, or to a similarly-situated person for 
     any other enterprise; or
       (3) if the prospective defendant has designated a person to 
     receive pre-litigation notices on a Year 2000 Internet 
     Website (as defined in section 3(7) of the Year 2000 
     Information and Readiness Disclosure Act), to the designated 
     person, if the prospective plaintiff has reasonable access to 
     the Internet.
       (c) Response to Notice.--
       (1) In general.--Within 30 days after receipt of the notice 
     specified in subsection (a), each prospective defendant shall 
     send by certified mail with return receipt requested to each 
     prospective plaintiff a written statement acknowledging 
     receipt of the notice, and describing the actions it has 
     taken or will take to address the problem identified by the 
     prospective plaintiff.
       (2) Willingness to engage in adr.--The Written statement 
     shall state whether the prospective defendant is willing to 
     engage in alternative dispute resolution.
       (3) Inadmissibility.--A written statement required by this 
     paragraph is not admissible in evidence, under Rule 408 of 
     the Federal Rules of Evidence or any analogous rule of 
     evidence in any State, in any proceeding to prove liability 
     for, or the invalidity of, a claim or its amount, or 
     otherwise as evidence of conduct or statements made in 
     compromise negotiations.
       (4) Presumptive time of receipt.--For purposes of paragraph 
     (1), a notice under subsection (a) is presumed to be received 
     7 days after it was sent.
       (d) Failure to Respond.--If a prospective defendant--
       (1) fails to respond to a notice provided pursuant to 
     subsection (a) within the 30 days specified in subsection 
     (c)(1); or
       (2) does not describe the action, if any, the prospective 
     defendant has taken, or will take, to address the problem 
     identified by the prospective plaintiff,

     the prospective plaintiff may immediately commence at legal 
     action against that prospective defendant.
       (e) Remediation Period.--
       (1) In general.--If the prospective defendant responds and 
     proposes remedial action it will take, of offers to engage in 
     alternative dispute resolution, then the prospective 
     plaintiff shall allow the prospective defendant an additional 
     60 days from the end of the 30-day notice period to complete 
     the proposed remedial action before commencing a legal action 
     against that prospective defendant.
       (2) Extension by agreement.--The prospective plaintiff and 
     prospective defendant may change the length of the 60-day 
     remediation period by written agreement.
       (3) Multiple extensions not allowed.--Except as provided in 
     paragraph (2), a defendant in a Y2K action is entitled to no 
     more than one 30-day period and one 60-day remediation period 
     under paragraph (1).
       (4) Statutes of limitation, etc., tolled.--Any applicable 
     statute of limitations or doctrine of laches in a Y2K action 
     to which paragraph (1) applies shall be tolled during the 
     notice and remediation period under that paragraph.
       (f) Failure to Provide Notice.--If a defendant determines 
     that a plaintiff has filed a Y2K action without providing the 
     notice specified in subsection (a) or without awaiting the 
     expiration of the appropriate waiting period specified in 
     subsection (c), the defendant may treat the plaintiff's 
     complaint as such a notice by so informing the court and the 
     plaintiff. If any defendant elects to treat the complaint as 
     such a notice--
       (1) the court shall stay all discovery and all other 
     proceedings in the action for the appropriate period after 
     filing of the complaint; and
       (2) the time for filing answers and all other pleadings 
     shall be tolled during the appropriate period.
       (g) Effect of Contractual or Statutory Waiting Periods.--In 
     cases in which a contract, or a statute enacted before 
     January 1, 1999, requires notice of non-performance and 
     provides for a period of delay prior to the initiation of 
     suit for breach or repudiation of contract, the period of 
     delay provided by contract or the statute is controlling over 
     the waiting period specified in subsections (c) and (d).
       (h) State Law Controls Alternative Methods.--Nothing in 
     this section supersedes or otherwise preempts any State law 
     or rule of civil procedure with respect to the use of 
     alternative dispute resolution for Y2K actions.
       (i) Provisional Remedies Unaffected.--Nothing in this 
     section interferes with the right of a litigant to 
     provisional remedies otherwise available under Rule 65 of the 
     Federal Rules of Civil Procedure or any State rule of civil 
     procedure providing extraordinary or provisional remedies in 
     any civil action in which the underlying complaint seeks both 
     injunctive and monetary relief.
       (j) Special Rule for Class Actions.--For the purpose of 
     applying this section to a Y2K action that is maintained as a 
     class action in Federal or State court, the requirements of 
     the preceding subsections of this section apply only to named 
     plaintiffs in the class action.

     SEC. 8. PLEADING REQUIREMENTS.

       (a) Application With Rules of Civil Procedure.--This 
     section applies exclusively to Y2K actions and, except to the 
     extent that this section requires additional information to 
     be contained in or attached to pleadings, nothing in this 
     section is intended to amend or otherwise supersede 
     applicable rules of Federal or State civil procedure.
       (b) Nature and Amount of Damages.--In all Y2K actions in 
     which damages are requested, there shall be filed with the 
     complaint a statement of specific information as to the 
     nature and amount of each element of damages and the factual 
     basis for the damages calculation.
       (c) Material Defects.--In any Y2K action in which the 
     plaintiff alleges that there is a

[[Page 7522]]

     material defect in a product or service, there shall be filed 
     with the complaint a statement of specific information 
     regarding the manifestations of the material defects and the 
     facts supporting a conclusion that the defects are material.
       (d) Required State of Mind.--In any Y2K action in which a 
     claim is asserted on which the plaintiff may prevail only on 
     proof that the defendant acted with a particular state of 
     mind, there shall be filed with the complaint, with respect 
     to each element of that claim, a statement of the facts 
     giving rise to a strong inference that the defendant acted 
     with the required state of mind.

     SEC. 9. DUTY TO MITIGATE.

       Damages awarded in any Y2K action shall exclude 
     compensation for damages the plaintiff could reasonably have 
     avoided in light of any disclosure or other information of 
     which the plaintiff was, or reasonably should have been, 
     aware, including information made available by the defendant 
     to purchasers or users of the defendant's product or services 
     concerning means of remedying or avoiding the Y2K failure.

     SEC. 10. APPLICATION OF EXISTING IMPOSSIBILITY OR COMMERCIAL 
                   IMPRACTICABILITY DOCTRINES.

       In any Y2K action for breach or repudiation of contract, 
     the applicability of the doctrines of impossibility and 
     commercial impracticability shall be determined by the law in 
     existence on January 1, 1999. Nothing in this Act shall be 
     construed as limiting or impairing a party's right to assert 
     defenses based upon such doctrines.

     SEC. 11. DAMAGES LIMITATION BY CONTRACT.

       In any Y2K action for breach or repudiation of contract, no 
     party may claim, nor be awarded, any category of damages 
     unless such damages are allowed--
       (1) by the express terms of the contract; or
       (2) if the contract is silent on such damages, by operation 
     of State law at the time the contract was effective or by 
     operation of Federal law.

     SEC. 12. DAMAGES IN TORT CLAIMS.

       (a) In General.--A party to a Y2K action making a tort 
     claim may not recover damages for economic loss unless--
       (1) the recovery of such losses is provided for in a 
     contract to which the party seeking to recover such losses is 
     a party; or
       (2) such losses result directly from damage to tangible 
     personal or real property caused by the Y2K failure (other 
     than damage to property that is the subject of the contract 
     between the parties to the Y2K action or, in the event there 
     is no contract between the parties, other than damage caused 
     only to the property that experienced the Y2K failure),

     and such damages are permitted under applicable State law.
       (b) Economic Loss.--For purposes of this section only, and 
     except as otherwise specifically provided in a valid and 
     enforceable written contract between the plaintiff and the 
     defendant in a Y2K action, the term ``economic loss''--
       (1) means amounts awarded to compensate an injured party 
     for any loss other than losses described in subsection 
     (a)(2); and
       (2) includes amounts awarded for damages such as--
       (A) lost profits or sales;
       (B) business interruption;
       (C) losses indirectly suffered as a result of the 
     defendant's wrongful act or omission;
       (D) losses that arise because of the claims of third 
     parties;
       (E) losses that must be plead as special damages; and
       (F) consequential damages (as defined in the Uniform 
     Commercial Code or analogous State commercial law).
       (c) Certain Actions Excluded.--This section does not 
     affect, abrogate, amend, or alter any patent, copyright, 
     trade-secret, trademark, or service-mark action, or any claim 
     for defamation or invasion of privacy under Federal or State 
     law.
       (d) Certain Other Actions.--A person liable for damages, 
     whether by settlement or judgment, in a civil action to which 
     this Act does not apply because of section 4(c), whose 
     liability, in whole or in part, is the result of a Y2K 
     failure may, notwithstanding any other provision of this Act, 
     pursue any remedy otherwise available under Federal or State 
     law against the person responsible for that Y2K failure to 
     the extent of recovering the amount of those damages.

     SEC. 13. STATE OF MIND; BYSTANDER LIABILITY; CONTROL.

       (a) Defendant's State of Mind.--In a Y2K action other than 
     a claim for breach of repudiation of contract, and in which 
     the defendant's actual or constructive awareness of an actual 
     or potential Y2K failure is an element of the claim, the 
     defendant is not liable unless the plaintiff establishes that 
     elements of the claim by clear and convincing evidence.
       (b) Limitation on Bystander Liability for Y2K Failures.--
       (1) In general.--With respect to any Y2K action for money 
     damages in which--
       (A) the defendant is not the manufacturer, seller, or 
     distributor of a product, or the provider of a service, that 
     suffers or causes the Y2K failure at
       (B) the plaintiff is not in substantial privity with the 
     defendant; and
       (C) the defendant's actual or constructive awareness of an 
     actual or potential Y2K failure is an element of the claim 
     under applicable law,

     the defendant shall not be liable unless the plaintiff, in 
     addition to establishing all other requisite elements of the 
     claim, proves by clear and convincing evidence that the 
     defendant actually knew, or recklessly disregarded a known 
     and substantial risk, that such failure would occur.
       (2) Substantial privity.--For purposes of paragraph (1)(B), 
     a plaintiff and a defendant are in substantial privity when, 
     in a Y2K action arising out of the performance of 
     professional services, the plaintiff and the defendant either 
     have contractual relations with one another or the plaintiff 
     is a person who, prior to the defendant's performance of such 
     services, was specifically identified to and acknowledged by 
     the defendant as a person for whose special benefit the 
     services were being performed.
       (3) Certain claims excluded.--For purposes of paragraph 
     (1)(C), claims in which the defendant's actual or 
     constructive awareness of an actual or potential Y2K failure 
     is an element of the claim under applicable law do not 
     include claims for negligence but do include claims such as 
     fraud, constructive fraud, breach of fiduciary duty, 
     negligent misrepresentation, and interference with contract 
     or economic advantage.
       (c) Control Not Determinative of Liability.--The fact that 
     a Y2K failure occurred in an entity, facility, system, 
     product, or component that was sold, leased, rented, or 
     otherwise within the control of the party against whom a 
     claim is asserted in a Y2K action shall not constitute the 
     sole basis for recovery of damages in that action. A claim in 
     a Y2K action for breach or repudiation of contract for such a 
     failure is governed by the terms of the contract.

     SEC. 14. LIABILITY OF OFFICERS, DIRECTORS, AND EMPLOYEES.

       (a) In General.--A director, officer, trustee, or employee 
     of a business or other organization (including a corporation, 
     unincorporated association, partnership, or non-profit 
     organization) is not personally liable in any Y2K action in 
     that person's capacity as a director, officer, trustee, or 
     employee of the business or organization for more than the 
     greater of--
       (1) $100,000; or
       (2) the amount of pre-tax compensation received by the 
     director, officer, trustee, or employee from the business or 
     organization during the 12 months immediately preceding the 
     act or omission for which liability is imposed.
       (b) Exception.--Subsection (a) does not apply in any Y2K 
     action in which it is found by clear and convincing evidence 
     that the director, officer, trustee, or employee--
       (1) made statements intended to be misleading regarding any 
     actual or potential year 2000 problem; or
       (2) withheld from the public significant information there 
     was a legal duty to disclose regarding any actual or 
     potential year 2000 problem of that business or organization 
     which would likely result in actionable Y2K failure.
       (c) State Law, Charter, or Bylaws.--Nothing in this section 
     supersedes any provision of State law, charter, or a bylaw 
     authorized by State law in existence on January 1, 1999, that 
     establishes lower financial limits on the liability of a 
     director, officer, trustee, or employee of such a business or 
     organization.

     SEC. 15. APPOINTMENT OF SPECIAL MASTERS OR MAGISTRATES FOR 
                   Y2K ACTIONS.

       Any District Court of the United States in which a Y2K 
     action is pending may appoint a special master or a 
     magistrate to hear the matter and to make findings of fact 
     and conclusions of law in accordance with Rule 53 of the 
     Federal Rules of Civil Procedure.

     SEC. 16. Y2K ACTIONS AS CLASS ACTIONS.

       (a) Minimum Injury Requirement.--A Y2K action involving a 
     claim that a product or service is defective may be 
     maintained as a class action in Federal or State court as to 
     that claim only if--
       (1) it satisfies all other prerequisites established by 
     applicable Federal or State law, including applicable rules 
     of civil procedure; and
       (2) the court finds that the defect in a product or service 
     as alleged would be a material defect for the majority of the 
     members of the class.
       (b) Notification.--In any Y2K action that is maintained as 
     a class action, the court, in addition to any other notice 
     required by applicable Federal or State law, shall direct 
     notice of the action to each member of the class, which shall 
     include--
       (1) a concise and clear description of the nature of the 
     action;
       (2) the jurisdiction where the case is pending; and
       (3) the fee arrangements with class counsel, including the 
     hourly fee being charged, or, if it is a contingency fee, the 
     percentage of the final award which will be paid, including 
     as estimate of the total amount that would be paid if the 
     requested damages were to be granted.
       (c) Forum for Y2K Class Actions.--
       (1) Jurisdiction.--Except as provided in paragraph (2), a 
     Y2K action may be brought as a class action in a United 
     States District Court or removed to a United States District 
     Court if the amount in controversy is greater than the sum or 
     value of $1,000,000 (exclusive of interest and costs), 
     computed on the

[[Page 7523]]

     basis of all claims to be determined in the action.
       (2) Exception.--A Y2K action may not be brought or removed 
     as a class action under this section if--
       (A) a substantial majority of the members of the proposed 
     plaintiff class are citizens of a single State;
       (B) the primary defendants are citizens of that State; and
       (C) the claims asserted will be governed primarily by the 
     law of that State, or
     the primary defendants are States, State officials, or other 
     governmental entities against whom the United States District 
     Court may be foreclosed from ordering relief.
       (D) This section shall become effective six days after the 
     date of enactment.
                                 ______
                                 

                         LOTT AMENDMENT NO. 270

  Mr. LOTT proposed an amendment to amendment No. 267 proposed by him 
to the bill, S. 96, supra; as follows:

       In the language proposed to be stricken, strike all after 
     the word ``Section'' and insert the following:

     SECTION 1. SHORT TITLE; TABLE OF SECTIONS.

       (a) Short Title.--This Act may be cited as the ``Y2K Act''.
       (b) Table of Sections.--The table of sections for this Act 
     is as follows:

Sec. 1. Short title; table of sections.
Sec. 2. Findings and purposes.
Sec. 3. Definitions.
Sec. 4. Application of Act.
Sec. 5. Punitive damages limitations.
Sec. 6. Proportionate liability.
Sec. 7. Pre-litigation notice.
Sec. 8. Pleading requirements.
Sec. 9. Duty to mitigate.
Sec. 10. Application of existing impossibility or commercial 
              impracticability doctrines.
Sec. 11. Damages limitation by contract.
Sec. 12. Damages in tort claims.
Sec. 13. State of mind; bystander liability; control.
Sec. 14. Liability of officers, directors, and employees.
Sec. 15. Appointment of special masters or magistrates for Y2K actions.
Sec. 16. Y2K actions as class actions.

     SEC. 2. FINDINGS AND PURPOSES.

       (a) Findings.--The Congress finds that:
       (1)(A) Many information technology systems, devices, and 
     programs are not capable of recognizing certain dates in 1999 
     and after December 31, 1999, and will read dates in the year 
     2000 and thereafter as if those dates represent the year 1900 
     or thereafter or will fail to process dates after December 
     31, 1999.
       (B) If not corrected, the problem described in subparagraph 
     (A) and resulting failures could incapacitate systems that 
     are essential to the functioning of markets, commerce, 
     consumer products, utilities, Government, and safety and 
     defense systems, in the United States and throughout the 
     world.
       (2) It is in the national interest that producers and users 
     of technology products concentrate their attention and 
     resources in the time remaining before January 1, 2000, on 
     assessing, fixing, testing, and developing contingency plans 
     to address any and all outstanding year 2000 computer date-
     change problems, so as to minimize possible disruptions 
     associated with computer failures.
       (3)(A) Because year 2000 computer date-change problems may 
     affect virtually all businesses and other users of technology 
     products to some degree, there is a substantial likelihood 
     that actual or potential year 2000 failures will prompt a 
     significant volume of litigation, much of it insubstantial.
       (B) The litigation described in subparagraph (A) would have 
     a range of undesirable effects, including the following:
       (i) It would threaten to waste technical and financial 
     resources that are better devoted to curing year 2000 
     computer date-change problems and ensuring that systems 
     remain or become operational.
       (ii) It could threaten the network of valued and trusted 
     business and customer relationships that are important to the 
     effective functioning of the national economy.
       (iii) It would strain the Nation's legal system, causing 
     particular problems for the small businesses and individuals 
     who already find that system inaccessible because of its 
     complexity and expense.
       (iv) The delays, expense, uncertainties, loss of control, 
     adverse publicity, and animosities that frequently accompany 
     litigation of business disputes could exacerbate the 
     difficulties associated with the date change and work against 
     the successful resolution of those difficulties.
       (4) It is appropriate for the Congress to enact legislation 
     to assure that Y2K problems do not unnecessarily disrupt 
     interstate commerce or create unnecessary caseloads in 
     Federal courts and to provide initiatives to help businesses 
     prepare and be in a position to withstand the potentially 
     devastating economic impact of Y2K.
       (5) Resorting to the legal system for resolution of Y2K 
     problems is not feasible for many businesses and individuals 
     who already find the legal system inaccessible, particularly 
     small businesses and individuals who already find the legal 
     system inaccessible, because of its complexity and expense.
       (6) The delays, expense, uncertainties, loss of control, 
     adverse publicity, and animosities that frequently accompany 
     litigation of business disputes can only exacerbate the 
     difficulties associated with Y2K date change, and work 
     against the successful resolution of those difficulties.
       (7) Concern about the potential for liability--in 
     particular, concern about the substantial litigation expense 
     associated with defending against even the most insubstantial 
     lawsuits--is prompting many persons and businesses with 
     technical expertise to avoid projects aimed at curing year 
     2000 computer date-change problems.
       (8) A proliferation of frivolous Y2K lawsuits by 
     opportunistic parties may further limit access to courts by 
     straining the resources of the legal system and depriving 
     deserving parties of their legitimate rights to relief.
       (9) Congress encourages businesses to approach their Y2K 
     disputes responsibly, and to avoid unnecessary, time-
     consuming and costly litigation about Y2K failures, 
     particularly those that are not material. Congress supports 
     good faith negotiations between parties when there is a 
     dispute over a Y2K problem, and, if necessary, urges the 
     parties to enter into voluntary, non-binding mediation rather 
     than litigation.
       (b) Purposes.--Based upon the power of the Congress under 
     Article I, Section 8, Clause 3 of the Constitution of the 
     United States, the purpose of this Act are--
       (1) to establish uniform legal standards that give all 
     businesses and users of technology products reasonable 
     incentives to solve Y2K computer date-change problems before 
     they develop;
       (2) to encourage continued Y2K remediation and testing 
     efforts by providers, suppliers, customers, and other 
     contracting partners;
       (3) to encourage private and public parties alike to 
     resolve Y2K disputes by alternative dispute mechanisms in 
     order to avoid costly and time-consuming litigation, to 
     initiate those mechanisms as early as possible, and to 
     encourage the prompt identification and correction of Y2K 
     problems; and
       (4) to lessen the burdens on interstate commerce by 
     discouraging insubstantial lawsuits while preserving the 
     ability of individuals and businesses that have suffered real 
     injury to obtain complete relief.

     SEC. 3. DEFINITIONS.

       In this Act:
       (1) Y2K action.--The term ``Y2K action''--
       (A) means a civil action commenced in any Federal or State 
     court, or an agency board of contract appeal proceeding, in 
     which the plaintiff's alleged harm or injury resulted 
     directly or indirectly from an actual or potential Y2K 
     failure, or a claim or defense is related directly or 
     indirectly to an actual or potential Y2K failure;
       (B) includes a civil action commenced in any Federal or 
     State court by a governmental entity when acting in a 
     commercial or contracting capacity; but
       (C) does not include an action brought by a governmental 
     entity acting in a regulatory, supervisory, or enforcement 
     capacity.
       (2) Y2K failure.--The term ``Y2K failure'' means failure by 
     any device or system (including any computer system and any 
     microchip or integrated circuit embedded in another device or 
     product), or any software, firmware, or other set or 
     collection of processing instructions to process, to 
     calculate, to compare, to sequence, to display, to store, to 
     transmit, or to receive year-2000 date-related data, 
     including failures--
       (A) to deal with or account for transitions or comparisons 
     from, into, and between the years 1999 and 2000 accurately;
       (B) to recognize or accurately to process any specific date 
     in 1999, 2000, or 2001; or
       (C) accurately to account for the year 2000's status as a 
     leap year, including recognition and processing of the 
     correct date on February 29, 2000.
       (3) Government entity.--The term ``government entity'' 
     means an agency, instrumentality, or other entity of Federal, 
     State, or local government (including multijurisdictional 
     agencies, instrumentalities, and entities).
       (4) Material defect.--The term ``material defect'' means a 
     defect in any item, whether tangible or intangible, or in the 
     provision of a service, that substantially prevents the item 
     or service from operating or functioning as designed or 
     according to its specifications. The term ``material defect'' 
     does not include a defect that--
       (A) has an insignificant or de minimis effect on the 
     operation or functioning of an item or computer program;
       (B) affects only a component of an item or program that, as 
     a whole, substantially operates or functions as designed; or
       (C) has an insignificant or de minimis effect on the 
     efficacy of the service provided.
       (5) Personal injury.--The term ``personal injury'' means 
     physical injury to a natural person, including--
       (A) death as a result of a physical injury; and
       (B) mental suffering, emotional distress, or similar 
     injuries suffered by that person in connection with a 
     physical injury.
       (6) State.--The term ``State'' means any State of the 
     United States, the District of Columbia, Commonwealth of 
     Puerto Rico, the Northern Mariana Islands, the United States 
     Virgin Islands, Guam, American

[[Page 7524]]

     Samoa, and any other territory or possession of the United 
     States, and any political subdivision thereof.
       (7) Contract.--The term ``contract'' means a contract, 
     tariff, license, or warranty.
       (8) Alternative dispute resolution.--The term ``alternative 
     dispute resolution'' means any process or proceeding, other 
     than adjudication by a court or in an administrative 
     proceeding, to assist in the resolution of issues in 
     controversy, through processes such as early neutral 
     evaluation, mediation, minitrial, and arbitration.

     SEC. 4. APPLICATION OF ACT.

       (a) General Rule.--This Act applies to any Y2K action 
     brought in a State or Federal court after February 22, 1999, 
     for a Y2K failure occurring before January 1, 2003, including 
     any appeal, remand, stay, or other judicial, administrative, 
     or alternative dispute resolution proceeding in such an 
     action.
       (b) No New Cause of Action Created.--Nothing in this Act 
     creates a new cause of action, and, except as otherwise 
     explicitly provided in this Act, nothing in this Act expands 
     any liability otherwise imposed or limits any defense 
     otherwise available under Federal or State law.
       (c) Claims for Personal Injury or Wrongful Death 
     Excluded.--This Act does not apply to a claim for personal 
     injury or for wrongful death.
       (d) Contract Preservation.--
       (1) In general.--Subject to paragraph (2), in any Y2K 
     action any written contractual term, including a limitation 
     or an exclusion of liability, or a disclaimer of warranty, 
     shall be strictly enforced unless the enforcement of that 
     term would manifestly and directly contravene applicable 
     State law embodied in any statute in effect on January 1, 
     1999, specifically addressing that term.
       (2) Interpretation of contract.--In any Y2K action in which 
     a contract to which paragraph (1) applies is silent as to a 
     particular issue, the interpretation of the contract as to 
     that issue shall be determined by applicable law in effect at 
     the time the contract was executed.
       (e) Preemption of State Law.--This Act supersedes State law 
     to the extent that it establishes a rule of law applicable to 
     a Y2K action that is inconsistent with State law, but nothing 
     in this Act implicates, alters, or diminishes the ability of 
     a State to defend itself against any claim on the basis of 
     sovereign immunity.

     SEC. 5. PUNITIVE DAMAGES LIMITATIONS.

       (a) In General.--In any Y2K action in which punitive 
     damages are permitted by applicable law, the defendant shall 
     not be liable for punitive damages unless the plaintiff 
     proves by clear and convincing evidence that the applicable 
     standard for awarding damages has been met.
       (b) Caps on Punitive Damages.--
       (1) In general.--Subject to the evidentiary standard 
     established by subsection (a), punitive damages permitted 
     under applicable law against a defendant in such a Y2K action 
     may not exceed the larger of--
       (A) 3 times the amount awarded for compensatory damages; or
       (B) $250,000.
       (2) Special rule.--In the case of a defendant--
       (A) who--
       (i) is sued in his or her capacity as an individual; and
       (ii) whose net worth does not exceed $500,000; or
       (B) that is an unincorporated business, a partnership, 
     corporation, association, unit of local government, or 
     organization with fewer than 25 full-time employees,

     paragraph (1) shall be applied by substituting ``smaller'' 
     for ``larger''.
       (3) No cap if injury specifically intended.--Neither 
     paragraph (1) nor paragraph (2) applies if the plaintiff 
     establishes by clear and convincing evidence that the 
     defendant acted with specific intent to injure the plaintiff.
       (c) Government Entities.--Punitive damages in a Y2K action 
     may not be awarded against a government entity.

     SEC. 6. PROPORTIONATE LIABILITY.

       (a) In General.--Except as provided in subsections (b) and 
     (c), a person against whom a final judgment is entered in a 
     Y2K action shall be liable solely for the portion of the 
     judgment that corresponds to the relative and proportional 
     responsibility of that person. In determining the percentage 
     of responsibility of any defendant, the trier of fact shall 
     determine that percentage as a percentage of the total fault 
     of all persons, including the plaintiff, who caused or 
     contributed to the total loss incurred by the plaintiff.
       (b) Proportionate Liability.--
       (1) Determination of responsibility.--In any Y2K action, 
     the court shall instruct the jury to answer special 
     interrogatories, or, if there is no jury, the court shall 
     make findings with respect to each defendant, including 
     defendants who have entered into settlements with the 
     plaintiff or plaintiffs, concerning--
       (A) the percentage of responsibility, if any, of each 
     defendant, measured as a percentage of the total fault of all 
     persons who caused or contributed to the loss incurred by the 
     plaintiff; and
       (B) if alleged by the plaintiff, whether the defendant--
       (i) acted with specific intent to injure the plaintiff; or
       (ii) knowingly committed fraud.
       (2) Contents of special interrogatories or findings.--The 
     responses to interrogatories or findings under paragraph (1) 
     shall specify the total amount of damages that the plaintiff 
     is entitled to recover and the percentage of responsibility 
     of each defendant found to have caused or contributed to the 
     loss incurred by the plaintiff.
       (3) Factors for consideration.--In determining the 
     percentage of responsibility under this subsection, the trier 
     of fact shall consider--
       (A) the nature of the conduct of each person found to have 
     caused or contributed to the loss incurred by the plaintiff; 
     and
       (B) the nature and extent of the causal relationship 
     between the conduct of each defendant and the damages 
     incurred by the plaintiff.
       (c) Joint Liability for Specific Intent or Fraud.--
       (1) In general.--Notwithstanding subsection (a), the 
     liability of a defendant in a Y2K action is joint and several 
     if the trier of fact specifically determines that the 
     defendant--
       (A) acted with specific intent to injure the plaintiff; or
       (B) knowingly committed fraud.
       (2) Fraud; Recklessness.--
       (A) Knowing commission of fraud described.--For purposes of 
     subsection (b)(1)(B)(ii) and paragraph (1)(B) of this 
     subsection, a defendant knowingly committed fraud if the 
     defendant--
       (i) made an untrue statement of a material fact, with 
     actual knowledge that the statement was false;
       (ii) omitted a fact necessary to make the statement not be 
     misleading, with actual knowledge that, as a result of the 
     omission, the statement was false; and
       (iii) knew that the plaintiff was reasonably likely to rely 
     on the false statement.
       (B) Recklessness.--For purposes of subsection (b)(1)(B) and 
     paragraph (1) of this subsection, reckless conduct by the 
     defendant does not constitute either a specific intent to 
     injure, or the knowing commission of fraud, by the defendant.
       (3) Right to contribution not affected.--Nothing in this 
     section affects the right, under any other law, of a 
     defendant to contribution with respect to another defendant 
     found under subsection (b)(1)(B), or determined under 
     paragraph (1)(B) of this subsection, to have acted with 
     specific intent to injure the plaintiff or to have knowingly 
     committed fraud.
       (d) Special Rules.--
       (1) Uncollectible share.--
       (A) In general.--Notwithstanding subsection (a), if, upon 
     motion not later than 6 months after a final judgment is 
     entered in any Y2K action, the court determines that all or 
     part of the share of the judgment against a defendant for 
     compensatory damages is not collectible against that 
     defendant, then each other defendant in the action is liable 
     for the uncollectible share as follows:
       (i) Percentage of net worth.--The other defendants are 
     jointly and severally liable for the uncollectible share if 
     the plaintiff establishes that--
       (I) the plaintiff is an individual whose recoverable 
     damages under the final judgment are equal to more than 10 
     percent of the net worth of the plaintiff; and
       (II) the net worth of the plaintiff is less than $200,000.
       (ii) Other plaintiffs.--For a plaintiff not described in 
     clause (i), each of the other defendants is liable for the 
     uncollectible share in proportion to the percentage of 
     responsibility of that defendant, except that the total 
     liability of a defendant under this clause may not exceed 50 
     percent of the proportionate share of that defendant, as 
     determined under subsection (b)(2).
       (B) Overall limit.--The total payments required under 
     subparagraph (A) from all defendants may not exceed the 
     amount of the uncollectible share.
       (C) Subject to contribution.--A defendant against whom 
     judgment is not collectible is subject to contribution and to 
     any continuing liability to the plaintiff on the judgment.
       (2) Special right of contribution.--To the extent that a 
     defendant is required to make an additional payment under 
     paragraph (1), that defendant may recover contribution--
       (A) from the defendant originally liable to make the 
     payment;
       (B) from any other defendant that is jointly and severally 
     liable;
       (C) from any other defendant held proportionately liable 
     who is liable to make the same payment and has paid less than 
     that other defendant's proportionate share of that payment; 
     or
       (D) from any other person responsible for the conduct 
     giving rise to the payment that would have been liable to 
     make the same payment.
       (3) Nondisclosure to jury.--The standard for allocation of 
     damages under subsection (a) and subsection (b)(1), and the 
     procedure for reallocation of uncollectible shares under 
     paragraph (1) of this subsection, shall not be disclosed to 
     members of the jury.
       (e) Settlement Discharge.--
       (1) In general.--A defendant who settles a Y2K action at 
     any time before final verdict

[[Page 7525]]

     or judgment shall be discharged from all claims for 
     contribution brought by other persons. Upon entry of the 
     settlement by the court, the court shall enter a bar order 
     constituting the final discharge of all obligations to the 
     plaintiff of the settling defendant arising out of the 
     action. The order shall bar all future claims for 
     contribution arising out of the action--
       (A) by any person against the settling defendant; and
       (B) by the settling defendant against any person other than 
     a person whose liability has been extinguished by the 
     settlement of the settling defendant.
       (2) Reduction.--If a defendant enters into a settlement 
     with the plaintiff before the final verdict or judgment, the 
     verdict or judgment shall be reduced by the greater of--
       (A) an amount that corresponds to the percentage of 
     responsibility of that defendant; or
       (B) the amount paid to the plaintiff by that defendant.
       (f) General Right of Contribution.--
       (1) In general.--A defendant who is jointly and severally 
     liable for damages in any Y2K action may recover contribution 
     from any other person who, if joined in the original action, 
     would have been liable for the same damages. A claim for 
     contribution shall be determined based on the percentage of 
     responsibility of the claimant and of each person against 
     whom a claim for contribution is made.
       (2) Statute of limitations for contribution.--An action for 
     contribution in connection with a Y2K action shall be brought 
     not later than 6 months after the entry of a final, 
     nonappealable judgment in the Y2K action, except than an 
     action for contribution brought by a defendant who was 
     required to make an additional payment under subsection 
     (d)(1) may be brought not later than 6 months after the date 
     on which such payment was made.
       (g) More Protective State Law Not Preempted.--Nothing in 
     this section pre-empts or supersedes any provision of State 
     statutory law that--
       (1) limits the liability of a defendant in a Y2K action to 
     a lesser amount than the amount determined under this 
     section; or
       (2) otherwise affords a greater degree of protection from 
     joint or several liability than is afforded by this section.

     SEC. 7. PRE-LITIGATION NOTICE.

       (a) In General.--Before commencing a Y2K action, except an 
     action that seeks only injunctive relief, a prospective 
     plaintiff with a Y2K claim shall send a written notice by 
     certified mail to each prospective defendant in that action. 
     The notice shall provide specific and detailed information 
     about--
       (1) the manifestations of any material defect alleged to 
     have caused harm or loss;
       (2) the harm or loss allegedly suffered by the prospective 
     plaintiff;
       (3) how the prospective plaintiff would like the 
     prospective defendant to remedy the problem;
       (4) the basis upon which the prospective plaintiff seeks 
     that remedy; and
       (5) the name, title, address, and telephone number of any 
     individual who has authority to negotiate a resolution of the 
     dispute on behalf of the prospective plaintiff.
       (b) Person to Whom Notice To Be Sent.--The notice required 
     by subsection (a) shall be sent--
       (1) to the registered agent of the prospective defendant 
     for service of legal process;
       (2) if the prospective defendant does not have a registered 
     agent, then to the chief executive officer of a corporation, 
     the managing partner of a partnership, the proprietor of a 
     sole proprietorship, or to a similarly-situated person for 
     any other enterprise; or
       (3) if the prospective defendant has designated a person to 
     receive pre-litigation notices on a Year 2000 Internet 
     Website (as defined in section 3(7) of the Year 2000 
     Information and Readiness Disclosure Act), to the designated 
     person, if the prospective plaintiff has reasonable access to 
     the Internet.
       (c) Response to Notice.--
       (1) In general.--Within 30 days after receipt of the notice 
     specified in subsection (a), each prospective defendant shall 
     send by certified mail with return receipt requested to each 
     prospective plaintiff a written statement acknowledging 
     receipt of the notice, and describing the actions it has 
     taken or will take to address the problem identified by the 
     prospective plaintiff.
       (2) Willingness to engage in adr.--The Written statement 
     shall state whether the prospective defendant is willing to 
     engage in alternative dispute resolution.
       (3) Inadmissibility.--A written statement required by this 
     paragraph is not admissible in evidence, under Rule 408 of 
     the Federal Rules of Evidence or any analogous rule of 
     evidence in any State, in any proceeding to prove liability 
     for, or the invalidity of, a claim or its amount, or 
     otherwise as evidence of conduct or statements made in 
     compromise negotiations.
       (4) Presumptive time of receipt.--For purposes of paragraph 
     (1), a notice under subsection (a) is presumed to be received 
     7 days after it was sent.
       (d) Failure to Respond.--If a prospective defendant--
       (1) fails to respond to a notice provided pursuant to 
     subsection (a) within the 30 days specified in subsection 
     (c)(1); or
       (2) does not describe the action, if any, the prospective 
     defendant has taken, or will take, to address the problem 
     identified by the prospective plaintiff,

     the prospective plaintiff may immediately commence at legal 
     action against that prospective defendant.
       (e) Remediation Period.--
       (1) In general.--If the prospective defendant responds and 
     proposes remedial action it will take, of offers to engage in 
     alternative dispute resolution, then the prospective 
     plaintiff shall allow the prospective defendant an additional 
     60 days from the end of the 30-day notice period to complete 
     the proposed remedial action before commencing a legal action 
     against that prospective defendant.
       (2) Extension by agreement.--The prospective plaintiff and 
     prospective defendant may change the length of the 60-day 
     remediation period by written agreement.
       (3) Multiple extensions not allowed.--Except as provided in 
     paragraph (2), a defendant in a Y2K action is entitled to no 
     more than one 30-day period and one 60-day remediation period 
     under paragraph (1).
       (4) Statutes of limitation, etc., tolled.--Any applicable 
     statute of limitations or doctrine of laches in a Y2K action 
     to which paragraph (1) applies shall be tolled during the 
     notice and remediation period under that paragraph.
       (f) Failure to Provide Notice.--If a defendant determines 
     that a plaintiff has filed a Y2K action without providing the 
     notice specified in subsection (a) or without awaiting the 
     expiration of the appropriate waiting period specified in 
     subsection (c), the defendant may treat the plaintiff's 
     complaint as such a notice by so informing the court and the 
     plaintiff. If any defendant elects to treat the complaint as 
     such a notice--
       (1) the court shall stay all discovery and all other 
     proceedings in the action for the appropriate period after 
     filing of the complaint; and
       (2) the time for filing answers and all other pleadings 
     shall be tolled during the appropriate period.
       (g) Effect of Contractual or Statutory Waiting Periods.--In 
     cases in which a contract, or a statute enacted before 
     January 1, 1999, requires notice of non-performance and 
     provides for a period of delay prior to the initiation of 
     suit for breach or repudiation of contract, the period of 
     delay provided by contract or the statute is controlling over 
     the waiting period specified in subsections (c) and (d).
       (h) State Law Controls Alternative Methods.--Nothing in 
     this section supersedes or otherwise preempts any State law 
     or rule of civil procedure with respect to the use of 
     alternative dispute resolution for Y2K actions.
       (i) Provisional Remedies Unaffected.--Nothing in this 
     section interferes with the right of a litigant to 
     provisional remedies otherwise available under Rule 65 of the 
     Federal Rules of Civil Procedure or any State rule of civil 
     procedure providing extraordinary or provisional remedies in 
     any civil action in which the underlying complaint seeks both 
     injunctive and monetary relief.
       (j) Special Rule for Class Actions.--For the purpose of 
     applying this section to a Y2K action that is maintained as a 
     class action in Federal or State court, the requirements of 
     the preceding subsections of this section apply only to named 
     plaintiffs in the class action.

     SEC. 8. PLEADING REQUIREMENTS.

       (a) Application With Rules of Civil Procedure.--This 
     section applies exclusively to Y2K actions and, except to the 
     extent that this section requires additional information to 
     be contained in or attached to pleadings, nothing in this 
     section is intended to amend or otherwise supersede 
     applicable rules of Federal or State civil procedure.
       (b) Nature and Amount of Damages.--In all Y2K actions in 
     which damages are requested, there shall be filed with the 
     complaint a statement of specific information as to the 
     nature and amount of each element of damages and the factual 
     basis for the damages calculation.
       (c) Material Defects.--In any Y2K action in which the 
     plaintiff alleges that there is a material defect in a 
     product or service, there shall be filed with the complaint a 
     statement of specific information regarding the 
     manifestations of the material defects and the facts 
     supporting a conclusion that the defects are material.
       (d) Required State of Mind.--In any Y2K action in which a 
     claim is asserted on which the plaintiff may prevail only on 
     proof that the defendant acted with a particular state of 
     mind, there shall be filed with the complaint, with respect 
     to each element of that claim, a statement of the facts 
     giving rise to a strong inference that the defendant acted 
     with the required state of mind.

     SEC. 9. DUTY TO MITIGATE.

       Damages awarded in any Y2K action shall exclude 
     compensation for damages the plaintiff could reasonably have 
     avoided in light of any disclosure or other information of 
     which the plaintiff was, or reasonably should have been, 
     aware, including information made available by the defendant 
     to purchasers or users of the defendant's product or services

[[Page 7526]]

     concerning means of remedying or avoiding the Y2K failure.

     SEC. 10. APPLICATION OF EXISTING IMPOSSIBILITY OR COMMERCIAL 
                   IMPRACTICABILITY DOCTRINES.

       In any Y2K action for breach or repudiation of contract, 
     the applicability of the doctrines of impossibility and 
     commercial impracticability shall be determined by the law in 
     existence on January 1, 1999. Nothing in this Act shall be 
     construed as limiting or impairing a party's right to assert 
     defenses based upon such doctrines.

     SEC. 11. DAMAGES LIMITATION BY CONTRACT.

       In any Y2K action for breach or repudiation of contract, no 
     party may claim, nor be awarded, any category of damages 
     unless such damages are allowed--
       (1) by the express terms of the contract; or
       (2) if the contract is silent on such damages, by operation 
     of State law at the time the contract was effective or by 
     operation of Federal law.

     SEC. 12. DAMAGES IN TORT CLAIMS.

       (a) In General.--A party to a Y2K action making a tort 
     claim may not recover damages for economic loss unless--
       (1) the recovery of such losses is provided for in a 
     contract to which the party seeking to recover such losses is 
     a party; or
       (2) such losses result directly from damage to tangible 
     personal or real property caused by the Y2K failure (other 
     than damage to property that is the subject of the contract 
     between the parties to the Y2K action or, in the event there 
     is no contract between the parties, other than damage caused 
     only to the property that experienced the Y2K failure),

     and such damages are permitted under applicable State law.
       (b) Economic Loss.--For purposes of this section only, and 
     except as otherwise specifically provided in a valid and 
     enforceable written contract between the plaintiff and the 
     defendant in a Y2K action, the term ``economic loss''--
       (1) means amounts awarded to compensate an injured party 
     for any loss other than losses described in subsection 
     (a)(2); and
       (2) includes amounts awarded for damages such as--
       (A) lost profits or sales;
       (B) business interruption;
       (C) losses indirectly suffered as a result of the 
     defendant's wrongful act or omission;
       (D) losses that arise because of the claims of third 
     parties;
       (E) losses that must be plead as special damages; and
       (F) consequential damages (as defined in the Uniform 
     Commercial Code or analogous State commercial law).
       (c) Certain Actions Excluded.--This section does not 
     affect, abrogate, amend, or alter any patent, copyright, 
     trade-secret, trademark, or service-mark action, or any claim 
     for defamation or invasion of privacy under Federal or State 
     law.
       (d) Certain Other Actions.--A person liable for damages, 
     whether by settlement or judgment, in a civil action to which 
     this Act does not apply because of section 4(c), whose 
     liability, in whole or in part, is the result of a Y2K 
     failure may, notwithstanding any other provision of this Act, 
     pursue any remedy otherwise available under Federal or State 
     law against the person responsible for that Y2K failure to 
     the extent of recovering the amount of those damages.

     SEC. 13. STATE OF MIND; BYSTANDER LIABILITY; CONTROL.

       (a) Defendant's State of Mind.--In a Y2K action other than 
     a claim for breach of repudiation of contract, and in which 
     the defendant's actual or constructive awareness of an actual 
     or potential Y2K failure is an element of the claim, the 
     defendant is not liable unless the plaintiff establishes that 
     elements of the claim by clear and convincing evidence.
       (b) Limitation on Bystander Liability for Y2K Failures.--
       (1) In general.--With respect to any Y2K action for money 
     damages in which--
       (A) the defendant is not the manufacturer, seller, or 
     distributor of a product, or the provider of a service, that 
     suffers or causes the Y2K failure at
       (B) the plaintiff is not in substantial privity with the 
     defendant; and
       (C) the defendant's actual or constructive awareness of an 
     actual or potential Y2K failure is an element of the claim 
     under applicable law,

     the defendant shall not be liable unless the plaintiff, in 
     addition to establishing all other requisite elements of the 
     claim, proves by clear and convincing evidence that the 
     defendant actually knew, or recklessly disregarded a known 
     and substantial risk, that such failure would occur.
       (2) Substantial privity.--For purposes of paragraph (1)(B), 
     a plaintiff and a defendant are in substantial privity when, 
     in a Y2K action arising out of the performance of 
     professional services, the plaintiff and the defendant either 
     have contractual relations with one another or the plaintiff 
     is a person who, prior to the defendant's performance of such 
     services, was specifically identified to and acknowledged by 
     the defendant as a person for whose special benefit the 
     services were being performed.
       (3) Certain claims excluded.--For purposes of paragraph 
     (1)(C), claims in which the defendant's actual or 
     constructive awareness of an actual or potential Y2K failure 
     is an element of the claim under applicable law do not 
     include claims for negligence but do include claims such as 
     fraud, constructive fraud, breach of fiduciary duty, 
     negligent misrepresentation, and interference with contract 
     or economic advantage.
       (c) Control Not Determinative of Liability.--The fact that 
     a Y2K failure occurred in an entity, facility, system, 
     product, or component that was sold, leased, rented, or 
     otherwise within the control of the party against whom a 
     claim is asserted in a Y2K action shall not constitute the 
     sole basis for recovery of damages in that action. A claim in 
     a Y2K action for breach or repudiation of contract for such a 
     failure is governed by the terms of the contract.

     SEC. 14. LIABILITY OF OFFICERS, DIRECTORS, AND EMPLOYEES.

       (a) In General.--A director, officer, trustee, or employee 
     of a business or other organization (including a corporation, 
     unincorporated association, partnership, or non-profit 
     organization) is not personally liable in any Y2K action in 
     that person's capacity as a director, officer, trustee, or 
     employee of the business or organization for more than the 
     greater of--
       (1) $100,000; or
       (2) the amount of pre-tax compensation received by the 
     director, officer, trustee, or employee from the business or 
     organization during the 12 months immediately preceding the 
     act or omission for which liability is imposed.
       (b) Exception.--Subsection (a) does not apply in any Y2K 
     action in which it is found by clear and convincing evidence 
     that the director, officer, trustee, or employee--
       (1) made statements intended to be misleading regarding any 
     actual or potential year 2000 problem; or
       (2) withheld from the public significant information there 
     was a legal duty to disclose regarding any actual or 
     potential year 2000 problem of that business or organization 
     which would likely result in actionable Y2K failure.
       (c) State Law, Charter, or Bylaws.--Nothing in this section 
     supersedes any provision of State law, charter, or a bylaw 
     authorized by State law in existence on January 1, 1999, that 
     establishes lower financial limits on the liability of a 
     director, officer, trustee, or employee of such a business or 
     organization.

     SEC. 15. APPOINTMENT OF SPECIAL MASTERS OR MAGISTRATES FOR 
                   Y2K ACTIONS.

       Any District Court of the United States in which a Y2K 
     action is pending may appoint a special master or a 
     magistrate to hear the matter and to make findings of fact 
     and conclusions of law in accordance with Rule 53 of the 
     Federal Rules of Civil Procedure.

     SEC. 16. Y2K ACTIONS AS CLASS ACTIONS.

       (a) Minimum Injury Requirement.--A Y2K action involving a 
     claim that a product or service is defective may be 
     maintained as a class action in Federal or State court as to 
     that claim only if--
       (1) it satisfies all other prerequisites established by 
     applicable Federal or State law, including applicable rules 
     of civil procedure; and
       (2) the court finds that the defect in a product or service 
     as alleged would be a material defect for the majority of the 
     members of the class.
       (b) Notification.--In any Y2K action that is maintained as 
     a class action, the court, in addition to any other notice 
     required by applicable Federal or State law, shall direct 
     notice of the action to each member of the class, which shall 
     include--
       (1) a concise and clear description of the nature of the 
     action;
       (2) the jurisdiction where the case is pending; and
       (3) the fee arrangements with class counsel, including the 
     hourly fee being charged, or, if it is a contingency fee, the 
     percentage of the final award which will be paid, including 
     as estimate of the total amount that would be paid if the 
     requested damages were to be granted.
       (c) Forum for Y2K Class Actions.--
       (1) Jurisdiction.--Except as provided in paragraph (2), a 
     Y2K action may be brought as a class action in a United 
     States District Court or removed to a United States District 
     Court if the amount in controversy is greater than the sum or 
     value of $1,000,000 (exclusive of interest and costs), 
     computed on the basis of all claims to be determined in the 
     action.
       (2) Exception.--A Y2K action may not be brought or removed 
     as a class action under this section if--
       (A) a substantial majority of the members of the proposed 
     plaintiff class are citizens of a single State;
       (B) the primary defendants are citizens of that State; and
       (C) the claims asserted will be governed primarily by the 
     law of that State, or
     the primary defendants are States, State officials, or other 
     governmental entities against whom the United States District 
     Court may be foreclosed from ordering relief.
       (D) This section shall become effective three days after 
     the date of enactment.
                                 ______
                                 

                         LOTT AMENDMENT NO. 271

  Mr. LOTT proposed an amendment to amendment No. 270 proposed by him 
to the bill, S. 96, supra; as follows:


[[Page 7527]]

       In the language proposed to be striken, strike all after 
     the word ``1'' and add the following:

     SHORT TITLE; TABLE OF SECTIONS.

       (a) Short Title.--This Act may be cited as the ``Y2K Act''.
       (b) Table of Sections.--The table of sections for this Act 
     is as follows:

Sec. 1. Short title; table of sections.
Sec. 2. Findings and purposes.
Sec. 3. Definitions.
Sec. 4. Application of Act.
Sec. 5. Punitive damages limitations.
Sec. 6. Proportionate liability.
Sec. 7. Pre-litigation notice.
Sec. 8. Pleading requirements.
Sec. 9. Duty to mitigate.
Sec. 10. Application of existing impossibility or commercial 
              impracticability doctrines.
Sec. 11. Damages limitation by contract.
Sec. 12. Damages in tort claims.
Sec. 13. State of mind; bystander liability; control.
Sec. 14. Liability of officers, directors, and employees.
Sec. 15. Appointment of special masters or magistrates for Y2K actions.
Sec. 16. Y2K actions as class actions.

     SEC. 2. FINDINGS AND PURPOSES.

       (a) Findings.--The Congress finds that:
       (1)(A) Many information technology systems, devices, and 
     programs are not capable of recognizing certain dates in 1999 
     and after December 31, 1999, and will read dates in the year 
     2000 and thereafter as if those dates represent the year 1900 
     or thereafter or will fail to process dates after December 
     31, 1999.
       (B) If not corrected, the problem described in subparagraph 
     (A) and resulting failures could incapacitate systems that 
     are essential to the functioning of markets, commerce, 
     consumer products, utilities, Government, and safety and 
     defense systems, in the United States and throughout the 
     world.
       (2) It is in the national interest that producers and users 
     of technology products concentrate their attention and 
     resources in the time remaining before January 1, 2000, on 
     assessing, fixing, testing, and developing contingency plans 
     to address any and all outstanding year 2000 computer date-
     change problems, so as to minimize possible disruptions 
     associated with computer failures.
       (3)(A) Because year 2000 computer date-change problems may 
     affect virtually all businesses and other users of technology 
     products to some degree, there is a substantial likelihood 
     that actual or potential year 2000 failures will prompt a 
     significant volume of litigation, much of it insubstantial.
       (B) The litigation described in subparagraph (A) would have 
     a range of undesirable effects, including the following:
       (i) It would threaten to waste technical and financial 
     resources that are better devoted to curing year 2000 
     computer date-change problems and ensuring that systems 
     remain or become operational.
       (ii) It could threaten the network of valued and trusted 
     business and customer relationships that are important to the 
     effective functioning of the national economy.
       (iii) It would strain the Nation's legal system, causing 
     particular problems for the small businesses and individuals 
     who already find that system inaccessible because of its 
     complexity and expense.
       (iv) The delays, expense, uncertainties, loss of control, 
     adverse publicity, and animosities that frequently accompany 
     litigation of business disputes could exacerbate the 
     difficulties associated with the date change and work against 
     the successful resolution of those difficulties.
       (4) It is appropriate for the Congress to enact legislation 
     to assure that Y2K problems do not unnecessarily disrupt 
     interstate commerce or create unnecessary caseloads in 
     Federal courts and to provide initiatives to help businesses 
     prepare and be in a position to withstand the potentially 
     devastating economic impact of Y2K.
       (5) Resorting to the legal system for resolution of Y2K 
     problems is not feasible for many businesses and individuals 
     who already find the legal system inaccessible, particularly 
     small businesses and individuals who already find the legal 
     system inaccessible, because of its complexity and expense.
       (6) The delays, expense, uncertainties, loss of control, 
     adverse publicity, and animosities that frequently accompany 
     litigation of business disputes can only exacerbate the 
     difficulties associated with Y2K date change, and work 
     against the successful resolution of those difficulties.
       (7) Concern about the potential for liability--in 
     particular, concern about the substantial litigation expense 
     associated with defending against even the most insubstantial 
     lawsuits--is prompting many persons and businesses with 
     technical expertise to avoid projects aimed at curing year 
     2000 computer date-change problems.
       (8) A proliferation of frivolous Y2K lawsuits by 
     opportunistic parties may further limit access to courts by 
     straining the resources of the legal system and depriving 
     deserving parties of their legitimate rights to relief.
       (9) Congress encourages businesses to approach their Y2K 
     disputes responsibly, and to avoid unnecessary, time-
     consuming and costly litigation about Y2K failures, 
     particularly those that are not material. Congress supports 
     good faith negotiations between parties when there is a 
     dispute over a Y2K problem, and, if necessary, urges the 
     parties to enter into voluntary, non-binding mediation rather 
     than litigation.
       (b) Purposes.--Based upon the power of the Congress under 
     Article I, Section 8, Clause 3 of the Constitution of the 
     United States, the purpose of this Act are--
       (1) to establish uniform legal standards that give all 
     businesses and users of technology products reasonable 
     incentives to solve Y2K computer date-change problems before 
     they develop;
       (2) to encourage continued Y2K remediation and testing 
     efforts by providers, suppliers, customers, and other 
     contracting partners;
       (3) to encourage private and public parties alike to 
     resolve Y2K disputes by alternative dispute mechanisms in 
     order to avoid costly and time-consuming litigation, to 
     initiate those mechanisms as early as possible, and to 
     encourage the prompt identification and correction of Y2K 
     problems; and
       (4) to lessen the burdens on interstate commerce by 
     discouraging insubstantial lawsuits while preserving the 
     ability of individuals and businesses that have suffered real 
     injury to obtain complete relief.

     SEC. 3. DEFINITIONS.

       In this Act:
       (1) Y2K action.--The term ``Y2K action''--
       (A) means a civil action commenced in any Federal or State 
     court, or an agency board of contract appeal proceeding, in 
     which the plaintiff's alleged harm or injury resulted 
     directly or indirectly from an actual or potential Y2K 
     failure, or a claim or defense is related directly or 
     indirectly to an actual or potential Y2K failure;
       (B) includes a civil action commenced in any Federal or 
     State court by a governmental entity when acting in a 
     commercial or contracting capacity; but
       (C) does not include an action brought by a governmental 
     entity acting in a regulatory, supervisory, or enforcement 
     capacity.
       (2) Y2K failure.--The term ``Y2K failure'' means failure by 
     any device or system (including any computer system and any 
     microchip or integrated circuit embedded in another device or 
     product), or any software, firmware, or other set or 
     collection of processing instructions to process, to 
     calculate, to compare, to sequence, to display, to store, to 
     transmit, or to receive year-2000 date-related data, 
     including failures--
       (A) to deal with or account for transitions or comparisons 
     from, into, and between the years 1999 and 2000 accurately;
       (B) to recognize or accurately to process any specific date 
     in 1999, 2000, or 2001; or
       (C) accurately to account for the year 2000's status as a 
     leap year, including recognition and processing of the 
     correct date on February 29, 2000.
       (3) Government entity.--The term ``government entity'' 
     means an agency, instrumentality, or other entity of Federal, 
     State, or local government (including multijurisdictional 
     agencies, instrumentalities, and entities).
       (4) Material defect.--The term ``material defect'' means a 
     defect in any item, whether tangible or intangible, or in the 
     provision of a service, that substantially prevents the item 
     or service from operating or functioning as designed or 
     according to its specifications. The term ``material defect'' 
     does not include a defect that--
       (A) has an insignificant or de minimis effect on the 
     operation or functioning of an item or computer program;
       (B) affects only a component of an item or program that, as 
     a whole, substantially operates or functions as designed; or
       (C) has an insignificant or de minimis effect on the 
     efficacy of the service provided.
       (5) Personal injury.--The term ``personal injury'' means 
     physical injury to a natural person, including--
       (A) death as a result of a physical injury; and
       (B) mental suffering, emotional distress, or similar 
     injuries suffered by that person in connection with a 
     physical injury.
       (6) State.--The term ``State'' means any State of the 
     United States, the District of Columbia, Commonwealth of 
     Puerto Rico, the Northern Mariana Islands, the United States 
     Virgin Islands, Guam, American Samoa, and any other territory 
     or possession of the United States, and any political 
     subdivision thereof.
       (7) Contract.--The term ``contract'' means a contract, 
     tariff, license, or warranty.
       (8) Alternative dispute resolution.--The term ``alternative 
     dispute resolution'' means any process or proceeding, other 
     than adjudication by a court or in an administrative 
     proceeding, to assist in the resolution of issues in 
     controversy, through processes such as early neutral 
     evaluation, mediation, minitrial, and arbitration.

     SEC. 4. APPLICATION OF ACT.

       (a) General Rule.--This Act applies to any Y2K action 
     brought in a State or Federal court after February 22, 1999, 
     for a Y2K failure occurring before January 1, 2003, including 
     any appeal, remand, stay, or other judicial, administrative, 
     or alternative dispute resolution proceeding in such an 
     action.
       (b) No New Cause of Action Created.--Nothing in this Act 
     creates a new cause of action, and, except as otherwise 
     explicitly provided in this Act, nothing in this Act expands 
     any liability otherwise imposed or

[[Page 7528]]

     limits any defense otherwise available under Federal or State 
     law.
       (c) Claims for Personal Injury or Wrongful Death 
     Excluded.--This Act does not apply to a claim for personal 
     injury or for wrongful death.
       (d) Contract Preservation.--
       (1) In general.--Subject to paragraph (2), in any Y2K 
     action any written contractual term, including a limitation 
     or an exclusion of liability, or a disclaimer of warranty, 
     shall be strictly enforced unless the enforcement of that 
     term would manifestly and directly contravene applicable 
     State law embodied in any statute in effect on January 1, 
     1999, specifically addressing that term.
       (2) Interpretation of contract.--In any Y2K action in which 
     a contract to which paragraph (1) applies is silent as to a 
     particular issue, the interpretation of the contract as to 
     that issue shall be determined by applicable law in effect at 
     the time the contract was executed.
       (e) Preemption of State Law.--This Act supersedes State law 
     to the extent that it establishes a rule of law applicable to 
     a Y2K action that is inconsistent with State law, but nothing 
     in this Act implicates, alters, or diminishes the ability of 
     a State to defend itself against any claim on the basis of 
     sovereign immunity.

     SEC. 5. PUNITIVE DAMAGES LIMITATIONS.

       (a) In General.--In any Y2K action in which punitive 
     damages are permitted by applicable law, the defendant shall 
     not be liable for punitive damages unless the plaintiff 
     proves by clear and convincing evidence that the applicable 
     standard for awarding damages has been met.
       (b) Caps on Punitive Damages.--
       (1) In general.--Subject to the evidentiary standard 
     established by subsection (a), punitive damages permitted 
     under applicable law against a defendant in such a Y2K action 
     may not exceed the larger of--
       (A) 3 times the amount awarded for compensatory damages; or
       (B) $250,000.
       (2) Special rule.--In the case of a defendant--
       (A) who--
       (i) is sued in his or her capacity as an individual; and
       (ii) whose net worth does not exceed $500,000; or
       (B) that is an unincorporated business, a partnership, 
     corporation, association, unit of local government, or 
     organization with fewer than 25 full-time employees,

     paragraph (1) shall be applied by substituting ``smaller'' 
     for ``larger''.
       (3) No cap if injury specifically intended.--Neither 
     paragraph (1) nor paragraph (2) applies if the plaintiff 
     establishes by clear and convincing evidence that the 
     defendant acted with specific intent to injure the plaintiff.
       (c) Government Entities.--Punitive damages in a Y2K action 
     may not be awarded against a government entity.

     SEC. 6. PROPORTIONATE LIABILITY.

       (a) In General.--Except as provided in subsections (b) and 
     (c), a person against whom a final judgment is entered in a 
     Y2K action shall be liable solely for the portion of the 
     judgment that corresponds to the relative and proportional 
     responsibility of that person. In determining the percentage 
     of responsibility of any defendant, the trier of fact shall 
     determine that percentage as a percentage of the total fault 
     of all persons, including the plaintiff, who caused or 
     contributed to the total loss incurred by the plaintiff.
       (b) Proportionate Liability.--
       (1) Determination of responsibility.--In any Y2K action, 
     the court shall instruct the jury to answer special 
     interrogatories, or, if there is no jury, the court shall 
     make findings with respect to each defendant, including 
     defendants who have entered into settlements with the 
     plaintiff or plaintiffs, concerning--
       (A) the percentage of responsibility, if any, of each 
     defendant, measured as a percentage of the total fault of all 
     persons who caused or contributed to the loss incurred by the 
     plaintiff; and
       (B) if alleged by the plaintiff, whether the defendant--
       (i) acted with specific intent to injure the plaintiff; or
       (ii) knowingly committed fraud.
       (2) Contents of special interrogatories or findings.--The 
     responses to interrogatories or findings under paragraph (1) 
     shall specify the total amount of damages that the plaintiff 
     is entitled to recover and the percentage of responsibility 
     of each defendant found to have caused or contributed to the 
     loss incurred by the plaintiff.
       (3) Factors for consideration.--In determining the 
     percentage of responsibility under this subsection, the trier 
     of fact shall consider--
       (A) the nature of the conduct of each person found to have 
     caused or contributed to the loss incurred by the plaintiff; 
     and
       (B) the nature and extent of the causal relationship 
     between the conduct of each defendant and the damages 
     incurred by the plaintiff.
       (c) Joint Liability for Specific Intent or Fraud.--
       (1) In general.--Notwithstanding subsection (a), the 
     liability of a defendant in a Y2K action is joint and several 
     if the trier of fact specifically determines that the 
     defendant--
       (A) acted with specific intent to injure the plaintiff; or
       (B) knowingly committed fraud.
       (2) Fraud; Recklessness.--
       (A) Knowing commission of fraud described.--For purposes of 
     subsection (b)(1)(B)(ii) and paragraph (1)(B) of this 
     subsection, a defendant knowingly committed fraud if the 
     defendant--
       (i) made an untrue statement of a material fact, with 
     actual knowledge that the statement was false;
       (ii) omitted a fact necessary to make the statement not be 
     misleading, with actual knowledge that, as a result of the 
     omission, the statement was false; and
       (iii) knew that the plaintiff was reasonably likely to rely 
     on the false statement.
       (B) Recklessness.--For purposes of subsection (b)(1)(B) and 
     paragraph (1) of this subsection, reckless conduct by the 
     defendant does not constitute either a specific intent to 
     injure, or the knowing commission of fraud, by the defendant.
       (3) Right to contribution not affected.--Nothing in this 
     section affects the right, under any other law, of a 
     defendant to contribution with respect to another defendant 
     found under subsection (b)(1)(B), or determined under 
     paragraph (1)(B) of this subsection, to have acted with 
     specific intent to injure the plaintiff or to have knowingly 
     committed fraud.
       (d) Special Rules.--
       (1) Uncollectible share.--
       (A) In general.--Notwithstanding subsection (a), if, upon 
     motion not later than 6 months after a final judgment is 
     entered in any Y2K action, the court determines that all or 
     part of the share of the judgment against a defendant for 
     compensatory damages is not collectible against that 
     defendant, then each other defendant in the action is liable 
     for the uncollectible share as follows:
       (i) Percentage of net worth.--The other defendants are 
     jointly and severally liable for the uncollectible share if 
     the plaintiff establishes that--
       (I) the plaintiff is an individual whose recoverable 
     damages under the final judgment are equal to more than 10 
     percent of the net worth of the plaintiff; and
       (II) the net worth of the plaintiff is less than $200,000.
       (ii) Other plaintiffs.--For a plaintiff not described in 
     clause (i), each of the other defendants is liable for the 
     uncollectible share in proportion to the percentage of 
     responsibility of that defendant, except that the total 
     liability of a defendant under this clause may not exceed 50 
     percent of the proportionate share of that defendant, as 
     determined under subsection (b)(2).
       (B) Overall limit.--The total payments required under 
     subparagraph (A) from all defendants may not exceed the 
     amount of the uncollectible share.
       (C) Subject to contribution.--A defendant against whom 
     judgment is not collectible is subject to contribution and to 
     any continuing liability to the plaintiff on the judgment.
       (2) Special right of contribution.--To the extent that a 
     defendant is required to make an additional payment under 
     paragraph (1), that defendant may recover contribution--
       (A) from the defendant originally liable to make the 
     payment;
       (B) from any other defendant that is jointly and severally 
     liable;
       (C) from any other defendant held proportionately liable 
     who is liable to make the same payment and has paid less than 
     that other defendant's proportionate share of that payment; 
     or
       (D) from any other person responsible for the conduct 
     giving rise to the payment that would have been liable to 
     make the same payment.
       (3) Nondisclosure to jury.--The standard for allocation of 
     damages under subsection (a) and subsection (b)(1), and the 
     procedure for reallocation of uncollectible shares under 
     paragraph (1) of this subsection, shall not be disclosed to 
     members of the jury.
       (e) Settlement Discharge.--
       (1) In general.--A defendant who settles a Y2K action at 
     any time before final verdict or judgment shall be discharged 
     from all claims for contribution brought by other persons. 
     Upon entry of the settlement by the court, the court shall 
     enter a bar order constituting the final discharge of all 
     obligations to the plaintiff of the settling defendant 
     arising out of the action. The order shall bar all future 
     claims for contribution arising out of the action--
       (A) by any person against the settling defendant; and
       (B) by the settling defendant against any person other than 
     a person whose liability has been extinguished by the 
     settlement of the settling defendant.
       (2) Reduction.--If a defendant enters into a settlement 
     with the plaintiff before the final verdict or judgment, the 
     verdict or judgment shall be reduced by the greater of--
       (A) an amount that corresponds to the percentage of 
     responsibility of that defendant; or
       (B) the amount paid to the plaintiff by that defendant.

[[Page 7529]]

       (f) General Right of Contribution.--
       (1) In general.--A defendant who is jointly and severally 
     liable for damages in any Y2K action may recover contribution 
     from any other person who, if joined in the original action, 
     would have been liable for the same damages. A claim for 
     contribution shall be determined based on the percentage of 
     responsibility of the claimant and of each person against 
     whom a claim for contribution is made.
       (2) Statute of limitations for contribution.--An action for 
     contribution in connection with a Y2K action shall be brought 
     not later than 6 months after the entry of a final, 
     nonappealable judgment in the Y2K action, except than an 
     action for contribution brought by a defendant who was 
     required to make an additional payment under subsection 
     (d)(1) may be brought not later than 6 months after the date 
     on which such payment was made.
       (g) More Protective State Law Not Preempted.--Nothing in 
     this section pre-empts or supersedes any provision of State 
     statutory law that--
       (1) limits the liability of a defendant in a Y2K action to 
     a lesser amount than the amount determined under this 
     section; or
       (2) otherwise affords a greater degree of protection from 
     joint or several liability than is afforded by this section.

     SEC. 7. PRE-LITIGATION NOTICE.

       (a) In General.--Before commencing a Y2K action, except an 
     action that seeks only injunctive relief, a prospective 
     plaintiff with a Y2K claim shall send a written notice by 
     certified mail to each prospective defendant in that action. 
     The notice shall provide specific and detailed information 
     about--
       (1) the manifestations of any material defect alleged to 
     have caused harm or loss;
       (2) the harm or loss allegedly suffered by the prospective 
     plaintiff;
       (3) how the prospective plaintiff would like the 
     prospective defendant to remedy the problem;
       (4) the basis upon which the prospective plaintiff seeks 
     that remedy; and
       (5) the name, title, address, and telephone number of any 
     individual who has authority to negotiate a resolution of the 
     dispute on behalf of the prospective plaintiff.
       (b) Person to Whom Notice To Be Sent.--The notice required 
     by subsection (a) shall be sent--
       (1) to the registered agent of the prospective defendant 
     for service of legal process;
       (2) if the prospective defendant does not have a registered 
     agent, then to the chief executive officer of a corporation, 
     the managing partner of a partnership, the proprietor of a 
     sole proprietorship, or to a similarly-situated person for 
     any other enterprise; or
       (3) if the prospective defendant has designated a person to 
     receive pre-litigation notices on a Year 2000 Internet 
     Website (as defined in section 3(7) of the Year 2000 
     Information and Readiness Disclosure Act), to the designated 
     person, if the prospective plaintiff has reasonable access to 
     the Internet.
       (c) Response to Notice.--
       (1) In general.--Within 30 days after receipt of the notice 
     specified in subsection (a), each prospective defendant shall 
     send by certified mail with return receipt requested to each 
     prospective plaintiff a written statement acknowledging 
     receipt of the notice, and describing the actions it has 
     taken or will take to address the problem identified by the 
     prospective plaintiff.
       (2) Willingness to engage in adr.--The Written statement 
     shall state whether the prospective defendant is willing to 
     engage in alternative dispute resolution.
       (3) Inadmissibility.--A written statement required by this 
     paragraph is not admissible in evidence, under Rule 408 of 
     the Federal Rules of Evidence or any analogous rule of 
     evidence in any State, in any proceeding to prove liability 
     for, or the invalidity of, a claim or its amount, or 
     otherwise as evidence of conduct or statements made in 
     compromise negotiations.
       (4) Presumptive time of receipt.--For purposes of paragraph 
     (1), a notice under subsection (a) is presumed to be received 
     7 days after it was sent.
       (d) Failure to Respond.--If a prospective defendant--
       (1) fails to respond to a notice provided pursuant to 
     subsection (a) within the 30 days specified in subsection 
     (c)(1); or
       (2) does not describe the action, if any, the prospective 
     defendant has taken, or will take, to address the problem 
     identified by the prospective plaintiff,

     the prospective plaintiff may immediately commence at legal 
     action against that prospective defendant.
       (e) Remediation Period.--
       (1) In general.--If the prospective defendant responds and 
     proposes remedial action it will take, of offers to engage in 
     alternative dispute resolution, then the prospective 
     plaintiff shall allow the prospective defendant an additional 
     60 days from the end of the 30-day notice period to complete 
     the proposed remedial action before commencing a legal action 
     against that prospective defendant.
       (2) Extension by agreement.--The prospective plaintiff and 
     prospective defendant may change the length of the 60-day 
     remediation period by written agreement.
       (3) Multiple extensions not allowed.--Except as provided in 
     paragraph (2), a defendant in a Y2K action is entitled to no 
     more than one 30-day period and one 60-day remediation period 
     under paragraph (1).
       (4) Statutes of limitation, etc., tolled.--Any applicable 
     statute of limitations or doctrine of laches in a Y2K action 
     to which paragraph (1) applies shall be tolled during the 
     notice and remediation period under that paragraph.
       (f) Failure to Provide Notice.--If a defendant determines 
     that a plaintiff has filed a Y2K action without providing the 
     notice specified in subsection (a) or without awaiting the 
     expiration of the appropriate waiting period specified in 
     subsection (c), the defendant may treat the plaintiff's 
     complaint as such a notice by so informing the court and the 
     plaintiff. If any defendant elects to treat the complaint as 
     such a notice--
       (1) the court shall stay all discovery and all other 
     proceedings in the action for the appropriate period after 
     filing of the complaint; and
       (2) the time for filing answers and all other pleadings 
     shall be tolled during the appropriate period.
       (g) Effect of Contractual or Statutory Waiting Periods.--In 
     cases in which a contract, or a statute enacted before 
     January 1, 1999, requires notice of non-performance and 
     provides for a period of delay prior to the initiation of 
     suit for breach or repudiation of contract, the period of 
     delay provided by contract or the statute is controlling over 
     the waiting period specified in subsections (c) and (d).
       (h) State Law Controls Alternative Methods.--Nothing in 
     this section supersedes or otherwise preempts any State law 
     or rule of civil procedure with respect to the use of 
     alternative dispute resolution for Y2K actions.
       (i) Provisional Remedies Unaffected.--Nothing in this 
     section interferes with the right of a litigant to 
     provisional remedies otherwise available under Rule 65 of the 
     Federal Rules of Civil Procedure or any State rule of civil 
     procedure providing extraordinary or provisional remedies in 
     any civil action in which the underlying complaint seeks both 
     injunctive and monetary relief.
       (j) Special Rule for Class Actions.--For the purpose of 
     applying this section to a Y2K action that is maintained as a 
     class action in Federal or State court, the requirements of 
     the preceding subsections of this section apply only to named 
     plaintiffs in the class action.

     SEC. 8. PLEADING REQUIREMENTS.

       (a) Application With Rules of Civil Procedure.--This 
     section applies exclusively to Y2K actions and, except to the 
     extent that this section requires additional information to 
     be contained in or attached to pleadings, nothing in this 
     section is intended to amend or otherwise supersede 
     applicable rules of Federal or State civil procedure.
       (b) Nature and Amount of Damages.--In all Y2K actions in 
     which damages are requested, there shall be filed with the 
     complaint a statement of specific information as to the 
     nature and amount of each element of damages and the factual 
     basis for the damages calculation.
       (c) Material Defects.--In any Y2K action in which the 
     plaintiff alleges that there is a material defect in a 
     product or service, there shall be filed with the complaint a 
     statement of specific information regarding the 
     manifestations of the material defects and the facts 
     supporting a conclusion that the defects are material.
       (d) Required State of Mind.--In any Y2K action in which a 
     claim is asserted on which the plaintiff may prevail only on 
     proof that the defendant acted with a particular state of 
     mind, there shall be filed with the complaint, with respect 
     to each element of that claim, a statement of the facts 
     giving rise to a strong inference that the defendant acted 
     with the required state of mind.

     SEC. 9. DUTY TO MITIGATE.

       Damages awarded in any Y2K action shall exclude 
     compensation for damages the plaintiff could reasonably have 
     avoided in light of any disclosure or other information of 
     which the plaintiff was, or reasonably should have been, 
     aware, including information made available by the defendant 
     to purchasers or users of the defendant's product or services 
     concerning means of remedying or avoiding the Y2K failure.

     SEC. 10. APPLICATION OF EXISTING IMPOSSIBILITY OR COMMERCIAL 
                   IMPRACTICABILITY DOCTRINES.

       In any Y2K action for breach or repudiation of contract, 
     the applicability of the doctrines of impossibility and 
     commercial impracticability shall be determined by the law in 
     existence on January 1, 1999. Nothing in this Act shall be 
     construed as limiting or impairing a party's right to assert 
     defenses based upon such doctrines.

     SEC. 11. DAMAGES LIMITATION BY CONTRACT.

       In any Y2K action for breach or repudiation of contract, no 
     party may claim, nor be awarded, any category of damages 
     unless such damages are allowed--
       (1) by the express terms of the contract; or
       (2) if the contract is silent on such damages, by operation 
     of State law at the time the contract was effective or by 
     operation of Federal law.

[[Page 7530]]



     SEC. 12. DAMAGES IN TORT CLAIMS.

       (a) In General.--A party to a Y2K action making a tort 
     claim may not recover damages for economic loss unless--
       (1) the recovery of such losses is provided for in a 
     contract to which the party seeking to recover such losses is 
     a party; or
       (2) such losses result directly from damage to tangible 
     personal or real property caused by the Y2K failure (other 
     than damage to property that is the subject of the contract 
     between the parties to the Y2K action or, in the event there 
     is no contract between the parties, other than damage caused 
     only to the property that experienced the Y2K failure),

     and such damages are permitted under applicable State law.
       (b) Economic Loss.--For purposes of this section only, and 
     except as otherwise specifically provided in a valid and 
     enforceable written contract between the plaintiff and the 
     defendant in a Y2K action, the term ``economic loss''--
       (1) means amounts awarded to compensate an injured party 
     for any loss other than losses described in subsection 
     (a)(2); and
       (2) includes amounts awarded for damages such as--
       (A) lost profits or sales;
       (B) business interruption;
       (C) losses indirectly suffered as a result of the 
     defendant's wrongful act or omission;
       (D) losses that arise because of the claims of third 
     parties;
       (E) losses that must be plead as special damages; and
       (F) consequential damages (as defined in the Uniform 
     Commercial Code or analogous State commercial law).
       (c) Certain Actions Excluded.--This section does not 
     affect, abrogate, amend, or alter any patent, copyright, 
     trade-secret, trademark, or service-mark action, or any claim 
     for defamation or invasion of privacy under Federal or State 
     law.
       (d) Certain Other Actions.--A person liable for damages, 
     whether by settlement or judgment, in a civil action to which 
     this Act does not apply because of section 4(c), whose 
     liability, in whole or in part, is the result of a Y2K 
     failure may, notwithstanding any other provision of this Act, 
     pursue any remedy otherwise available under Federal or State 
     law against the person responsible for that Y2K failure to 
     the extent of recovering the amount of those damages.

     SEC. 13. STATE OF MIND; BYSTANDER LIABILITY; CONTROL.

       (a) Defendant's State of Mind.--In a Y2K action other than 
     a claim for breach of repudiation of contract, and in which 
     the defendant's actual or constructive awareness of an actual 
     or potential Y2K failure is an element of the claim, the 
     defendant is not liable unless the plaintiff establishes that 
     elements of the claim by clear and convincing evidence.
       (b) Limitation on Bystander Liability for Y2K Failures.--
       (1) In general.--With respect to any Y2K action for money 
     damages in which--
       (A) the defendant is not the manufacturer, seller, or 
     distributor of a product, or the provider of a service, that 
     suffers or causes the Y2K failure at
       (B) the plaintiff is not in substantial privity with the 
     defendant; and
       (C) the defendant's actual or constructive awareness of an 
     actual or potential Y2K failure is an element of the claim 
     under applicable law,

     the defendant shall not be liable unless the plaintiff, in 
     addition to establishing all other requisite elements of the 
     claim, proves by clear and convincing evidence that the 
     defendant actually knew, or recklessly disregarded a known 
     and substantial risk, that such failure would occur.
       (2) Substantial privity.--For purposes of paragraph (1)(B), 
     a plaintiff and a defendant are in substantial privity when, 
     in a Y2K action arising out of the performance of 
     professional services, the plaintiff and the defendant either 
     have contractual relations with one another or the plaintiff 
     is a person who, prior to the defendant's performance of such 
     services, was specifically identified to and acknowledged by 
     the defendant as a person for whose special benefit the 
     services were being performed.
       (3) Certain claims excluded.--For purposes of paragraph 
     (1)(C), claims in which the defendant's actual or 
     constructive awareness of an actual or potential Y2K failure 
     is an element of the claim under applicable law do not 
     include claims for negligence but do include claims such as 
     fraud, constructive fraud, breach of fiduciary duty, 
     negligent misrepresentation, and interference with contract 
     or economic advantage.
       (c) Control Not Determinative of Liability.--The fact that 
     a Y2K failure occurred in an entity, facility, system, 
     product, or component that was sold, leased, rented, or 
     otherwise within the control of the party against whom a 
     claim is asserted in a Y2K action shall not constitute the 
     sole basis for recovery of damages in that action. A claim in 
     a Y2K action for breach or repudiation of contract for such a 
     failure is governed by the terms of the contract.

     SEC. 14. LIABILITY OF OFFICERS, DIRECTORS, AND EMPLOYEES.

       (a) In General.--A director, officer, trustee, or employee 
     of a business or other organization (including a corporation, 
     unincorporated association, partnership, or non-profit 
     organization) is not personally liable in any Y2K action in 
     that person's capacity as a director, officer, trustee, or 
     employee of the business or organization for more than the 
     greater of--
       (1) $100,000; or
       (2) the amount of pre-tax compensation received by the 
     director, officer, trustee, or employee from the business or 
     organization during the 12 months immediately preceding the 
     act or omission for which liability is imposed.
       (b) Exception.--Subsection (a) does not apply in any Y2K 
     action in which it is found by clear and convincing evidence 
     that the director, officer, trustee, or employee--
       (1) made statements intended to be misleading regarding any 
     actual or potential year 2000 problem; or
       (2) withheld from the public significant information there 
     was a legal duty to disclose regarding any actual or 
     potential year 2000 problem of that business or organization 
     which would likely result in actionable Y2K failure.
       (c) State Law, Charter, or Bylaws.--Nothing in this section 
     supersedes any provision of State law, charter, or a bylaw 
     authorized by State law in existence on January 1, 1999, that 
     establishes lower financial limits on the liability of a 
     director, officer, trustee, or employee of such a business or 
     organization.

     SEC. 15. APPOINTMENT OF SPECIAL MASTERS OR MAGISTRATES FOR 
                   Y2K ACTIONS.

       Any District Court of the United States in which a Y2K 
     action is pending may appoint a special master or a 
     magistrate to hear the matter and to make findings of fact 
     and conclusions of law in accordance with Rule 53 of the 
     Federal Rules of Civil Procedure.

     SEC. 16. Y2K ACTIONS AS CLASS ACTIONS.

       (a) Minimum Injury Requirement.--A Y2K action involving a 
     claim that a product or service is defective may be 
     maintained as a class action in Federal or State court as to 
     that claim only if--
       (1) it satisfies all other prerequisites established by 
     applicable Federal or State law, including applicable rules 
     of civil procedure; and
       (2) the court finds that the defect in a product or service 
     as alleged would be a material defect for the majority of the 
     members of the class.
       (b) Notification.--In any Y2K action that is maintained as 
     a class action, the court, in addition to any other notice 
     required by applicable Federal or State law, shall direct 
     notice of the action to each member of the class, which shall 
     include--
       (1) a concise and clear description of the nature of the 
     action;
       (2) the jurisdiction where the case is pending; and
       (3) the fee arrangements with class counsel, including the 
     hourly fee being charged, or, if it is a contingency fee, the 
     percentage of the final award which will be paid, including 
     as estimate of the total amount that would be paid if the 
     requested damages were to be granted.
       (c) Forum for Y2K Class Actions.--
       (1) Jurisdiction.--Except as provided in paragraph (2), a 
     Y2K action may be brought as a class action in a United 
     States District Court or removed to a United States District 
     Court if the amount in controversy is greater than the sum or 
     value of $1,000,000 (exclusive of interest and costs), 
     computed on the basis of all claims to be determined in the 
     action.
       (2) Exception.--A Y2K action may not be brought or removed 
     as a class action under this section if--
       (A) a substantial majority of the members of the proposed 
     plaintiff class are citizens of a single State;
       (B) the primary defendants are citizens of that State; and
       (C) the claims asserted will be governed primarily by the 
     law of that State, or
     the primary defendants are States, State officials, or other 
     governmental entities against whom the United States District 
     Court may be foreclosed from ordering relief.
       (D) This section shall become effective one day after the 
     date of enactment.
                                 ______
                                 

                        INHOFE AMENDMENT NO. 272

  (Ordered to lie on the table.)
  Mr. INHOFE submitted an amendment intended to be proposed by him to 
the bill, S. 96, supra; as follows:

       At the appropriate place, insert the following:

     SEC. __. Y2K REGULATORY AMNESTY ACT OF 1999.

       (a) Short Title.--This section may be cited as the ``Y2K 
     Regulatory Amnesty Act of 1999''.
       (b) Definitions.--In this section:
       (1) Defendant.--
       (A) In general.--The term ``defendant'' includes a State or 
     local government.
       (B) State.--The term ``State'' means each of the several 
     States of the United States, the District of Columbia, the 
     Commonwealth of Puerto Rico, the Virgin Islands, Guam, 
     American Samoa, and the Commonwealth of the Northern Mariana 
     Islands.
       (C) Local Government.--The term ``local government'' 
     means--
       (i) any county, city, town, township, parish, village, or 
     other general purpose political subdivision of a State; and

[[Page 7531]]

       (ii) any combination of political subdivisions described in 
     clause (i) recognized by the Secretary of Housing and Urban 
     Development.
       (2) Y2K failure.--The term ``Y2K failure'' means any 
     failure by any device or system (including any computer 
     system and any microchip or integrated circuit embedded in 
     another device or product), or any software, firmware, or 
     other set or collection of processing instructions, however 
     constructed, in processing, calculating, comparing, 
     sequencing, displaying, storing, transmitting, or receiving 
     date-related data, including--
       (A) the failure to accurately administer or account for 
     transitions or comparisons from, into, and between the 20th 
     and 21st centuries, and between 1999 and 2000; or
       (B) the failure to recognize or accurately process any 
     specific date, and the failure accurately to account for the 
     status of the year 2000 as a leap year.
       (3) Y2K upset.--The term ``Y2K upset''--
       (A) means an exceptional incident involving temporary 
     noncompliance with applicable federally enforceable 
     requirements because of factors related to a Y2K failure that 
     are beyond the reasonable control of the defendant charged 
     with compliance; and
       (B) does not include--
       (i) noncompliance with applicable federally enforceable 
     requirements that constitutes or would create an imminent 
     threat to public health, safety, or the environment;
       (ii) noncompliance with applicable federally enforceable 
     requirements that provide for the safety and soundness of the 
     banking or monetary system, including the protection of 
     depositors;
       (iii) noncompliance to the extent caused by operational 
     error or negligence;
       (iv) lack of reasonable preventative maintenance; or
       (v) lack of preparedness for Y2K.
       (c) Conditions Necessary for a Demonstration of a Y2K 
     Upset.--A defendant who wishes to establish the affirmative 
     defense of Y2K upset shall demonstrate, through properly 
     signed, contemporaneous operating logs, or other relevant 
     evidence that--
       (1) the defendant previously made a good faith effort to 
     effectively remediate Y2K problems;
       (2) a Y2K upset occurred as a result of a Y2K system 
     failure or other Y2K emergency;
       (3) noncompliance with the applicable federally enforceable 
     requirement was unavoidable in the face of a Y2K emergency or 
     was intended to prevent the disruption of critical functions 
     or services that could result in the harm of life or 
     property;
       (4) upon identification of noncompliance the defendant 
     invoking the defense began immediate actions to remediate any 
     violation of federally enforceable requirements; and
       (5) the defendant submitted notice to the appropriate 
     Federal regulatory authority of a Y2K upset within 72 hours 
     from the time that it became aware of the upset.
       (d) Grant of a Y2K Upset Defense.--Subject to the other 
     provisions of this section, the Y2K upset defense shall be a 
     complete defense to any action brought as a result of 
     noncompliance with federally enforceable requirements for any 
     defendant who establishes by a preponderance of the evidence 
     that the conditions set forth in subsection (c) are met.
       (e) Length of Y2K Upset.--The maximum allowable length of 
     the Y2K upset shall be not more than 30 days beginning on the 
     date of the upset unless granted specific relief by the 
     appropriate regulatory authority.
       (f) Violation of a Y2K Upset.--Fraudulent use of the Y2K 
     upset defense provided for in this section shall be subject 
     to penalties provided in section 1001 of title 18, United 
     States Code.
       (g) Expiration of Defense.--The Y2K upset defense may not 
     be asserted for a Y2K upset occurring after June 30, 2000.

                          ____________________